Friday, December 9, 2016

More Bakken Crude Oil Expected To Move By Rail Because Of Dakota Pipeline Decision

As a result of last week’s decision by the U.S. Army Corps of Engineers to deny a permit for the construction of a key section of the Dakota Access Pipeline, the Bakken crude earmarked for the pipeline will now have to be shipped by other means of transport, including by rail.
Reuters reported shippers who expected to see another 570,000 barrels of daily Bakken pipeline capacity in 2017 will have to find new ways to move supply.
Protestors of the pipeline complained about dangers to the environment and local communities, however, transport by rail carries a higher carbon dioxide (CO2) footprint than pipelines and has its own vulnerabilities.
Although rail makes up nearly 65 percent of total crude export capacity in the Bakken Shale, it is now being underutilized because it is less efficient and more costly.
Rick Smead, managing director of advisory services for RBN Energy, said, "Once the pipes are full, that means more trains. And without DAPL, the pipes get full sooner than they otherwise would have.”
With crude production expected to increase, so are the chances of a rail accident.
Reuters reported incidents involving crude-by-rail peaked in 2014, at nearly 190, versus just one accident in 2006, the data shows.
The rise in accidents followed a surge in volumes moving by rail each day, which hit a high of 29.2 million barrels per month in October 2014. As of September 2016, that had declined to about 10.5 million barrels monthly, according to data from the EIA, as new pipelines displaced rail and production has declined.
With lower volumes, train accidents involving crude are down significantly, with only nine reported this year, according to federal Pipeline and Hazardous Materials Administration data.
In August of 2015, Gov. Wolf released an Oil Train Safety Report with 27 recommendations to address crude oil train safety in the Commonwealth.
In February of this year, the Public Utility Commission asked for more funding to hire two additional rail safety inspectors to address a recommendation made in the Governor’s report.
Related Stories:
Gov. Wolf Releases Oil Train Safety Report With 27 Recommendations

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