Railroads

Coal has no future, says US railroad boss

20 Jul 2017   Coal, Railroads

One of the largest haulers of US coal says fossil fuels have no future, despite pledges to the contrary from President Donald Trump. CSX, a freight railroad company with origins in the bituminous coal seams of Appalachia, will not buy a single new locomotive to pull coal trains, chief executive Hunter Harrison told analysts on Wednesday. “Fossil fuels are dead,” Mr Harrison said. “That’s a long-term view. It’s not going to happen overnight. It’s not going to be in two or three years. But it’s going away, in my view.”  His comments come as the White House aims to revive the American coal industry by rescinding environmental regulations and abandoning the Paris climate agreement. Mr Trump surrounded himself with coal miners earlier this year when he signed an executive order he said was “putting an end to the war on coal”.  Fossil fuels are dead . . . It’s not going to be in two or three years. But it’s going away, in my view Yet US power generators are building more plants fuelled by cheap natural gas, displacing old coal-fired units. Falling costs for solar and wind energy have also eaten into coal’s market share.  North American railroads have reshaped their asset holdings in acknowledgment that coal’s apex has passed.

Oil Trains Remain Industry’s Long-term Plan for Shipping to West Coast

10 Jun 2017   Railroads

Despite a string of recent successes by West Coast communities to block the construction of oil-by-rail facilities, the oil industry has no plans to give up using rail to move oil to the West Coast. And it isn’t hard to understand why. There are no plans for oil pipelines from North Dakota to California or Washington. And with indications that the Bakken field may already be declining , any investment in such a project is highly unlikely. And unlike at East Coast refineries, those in the west don’t have the option to buy light crude from Africa, delivered via tanker , which is a better option than buying Bakken oil from North Dakota or Montana, delivered by rail, when oil prices are low. That’s why the oil industry continues to pursue its long-term plans to move oil west via train. The company Global Partners has been a major player […]

Argentina plans railway to help lower shale drilling costs

Argentina’s national government is in the preparatory stages for equipping an aging railway and laying new train tracks to service the Vaca Muerta shale play. Jorge Ocampos, a legislator in the province of Rio Negro, made a presentation of the $1.2 billion project late Wednesday, according to a statement Thursday. The railway is to run from the port city of Bahia Blanca in Buenos Aires province through Rio Negro to Anelo and Rincon de los Sauces, a town and city at the heart of Vaca Muerta activities in the southwestern province of Neuquen. The project also includes building more roads and highways, Ocampos said in the statement. Article continues below… Oilgram News brings you fast-breaking global petroleum and gas news on and including: Industry players, upstream and downstream markets, refineries, midstream transportation and financial reports Supply and demand trends, government actions, exploration and technology Daily futures summary Weekly API […]

Canada phasing out some oil railcars early

27 Jul 2016   Canada, Railroads

Getting older rail cars that carry crude oil out of service quicker means eliminating the weakest link in the chain of safety, the Canadian government said. Canadian Transport Minister Marc Garneau issued a directive that puts the phase-out date for rail cars designated DOT-111 at Nov. 1, at least six months ahead of schedule. “By removing the least crash resistant tank cars in service, we continue to modernize how dangerous goods are shipped in Canada and further protect Canadians and their families who live near Canada’s rail network,” he said in a statement. The Canadian government issued new regulations in 2014 aimed at increasing safety on the Canadian rail system. The measure from regulator Transport Canada started with an order to remove around 5,000 tanker […]

Crude Slump, Pipeline Expansion Mark End of U.S. Oil-Train Boom

26 Jul 2016   Railroads, USA

Even at its height in 2014, crude-by-rail accounted for less than 2% of total rail… The oil-train boom is waning almost as quickly as it began. Rail became a major way to move crude after companies began unlocking new bounties of oil from shale formations, with volumes rising from almost nothing in 2009 to more than one million barrels a day by 2014, according to the U.S. Energy Information Administration. But those numbers began falling after oil prices started tumbling two years ago, and aren’t projected to recover anytime soon. In April, just 430,000 barrels of oil rode the rails each day, according to the latest federal figures. Some of the decline came from a drop in U.S. oil production, but oil and rail executives say the drop-off may be permanent. “At least some portion, and it could be a pretty large portion,” of the rail business won’t return, […]

U.S. regulators propose information sharing on crude-carrying trains

14 Jul 2016   Railroads

U.S. regulators on Wednesday proposed a rule on trains carrying crude that requires railroads to share information on the shipments with local governments and emergency responders, a month after a fiery derailment of an oil train along Oregon’s scenic Columbia River gorge. The rule proposed by the Transportation Department’s Pipeline and Hazardous Materials Safety Administration and the Federal Railroad Administration would require railroads to provide monthly reports to state and tribal firefighter commissions and emergency responders. In the reports, railroads would have to include estimates of the number of so-called high hazard flammable trains expected to travel through counties in states, and the routes for the trains. The rule will soon be published in the Federal Register, but it was not immediately clear when it was expected to […]

Union Pacific Faulted in Crude Oil Train Derailment

24 Jun 2016   Railroads

The Federal Railroad Administration said it has made a preliminary determination that the derailment of a crude oil train in Oregon earlier this month resulted from the failure of Union Pacific Corp. to maintain its track. The FRA said its preliminary investigation of the accident that occurred on June 3 near Mosier, Ore., found specifically that the derailment was caused by broken bolts that eventually allowed the rails to be pushed outward as trains moved across them. The findings were made in what the FRA said was a “preliminary factual findings report.” The report said the train was traveling at about 25 miles an hour, which was within the speed limit. A total of 16 tank cars derailed, it said. During the derailment, one tank car was punctured, which led to a fire of four […]

Oregon Looks To Ban Crude-Oil-Only Trains Following Derailment And Fire

18 Jun 2016   Railroads

Oil Train Derails Oregon transportation officials are now calling for a halt of Union Pacific trains after a derailment on the third of June. Eleven cars from a 96-car train owned by Union Pacific that was hauling crude oil along the border of Oregon and Washington derailed, causing one of the cars to catch fire. The Oregon Department of Transportation raised its concerns on Thursday to the Oregon Transportation Commission, in reference to this specific type of train—crude-oil-only—which is heavier than others and might be putting greater strain on the lag bolts that connect the rails and tracks. The Oregon Department of Transportation is requesting a moratorium on the train. Union Pacific has blamed the accident on the failure of the bolts. At the time, the residents of Mosier were evacuated and 42,000 gallons of oil were spilled into the Columbia River. Oregon Department of Transportation (ODOT) Administrator Hal […]

Luck Rides The Rails: Another Near Miss with an “Insane” Bakken Oil Bomb Train

8 Jun 2016   Railroads

Luck was in abundance on Friday in Mosier, Oregon where the latest Bakken oil train derailed and erupted into flames near a 50-home residential area and a school. As Mosier Fire Chief Jim Appleton said , “Mosier really dodged a bullet in the last 24 hours.” “I hope that this becomes death knell for this mode of shipping this cargo. I think it’s insane,” Appleton said . “I’ve been very hesitant to take a side up to now, but with this incident, and with all due respect to the wonderful people that I’ve met at Union Pacific, shareholder value doesn’t outweigh the lives and happiness of our community.” It’s a familiar story to those following the Bakken oil “bomb train” saga — luck. “If I had been there another second, it’d probably have killed me,” Bounds said. “Glass was flying everywhere behind me. The walls were caving in. I […]

Multi-car oil train derails in Oregon: officials

4 Jun 2016   Railroads

A multi-car oil train derailed in northern Oregon on Friday, about 70 miles (110 km) outside of Portland, officials confirmed, though there were no initial reports of injuries. Black smoke could be seen following the accident, which occurred in Mosier, near the Columbia River. A spokesman with the Mosier Volunteer Fire Department said there were no injuries, and the damage was confined to the railroad. Union Pacific Corp owns the train, The Oregonian reported, citing a spokesman. Reuters has not verified that information. “It has closed the interstate. There’s black and white smoke, and I hear they might be evacuating houses in the area, too,” said Jared Snyder, proprietor of the Thirsty Woman Pub in Mosier. Interstate 84 has been closed as a result and the nearby Mosier Community School was evacuated, a school official said. (Reporting by Jessica Resnick-Ault, Devika Krishna Kumar, Eric M. Johnson and Curtis Skinner; […]

Oregon train derailment spills oil, sparks fire

4 Jun 2016   Railroads

A train towing cars full of oil derailed Friday in Oregon’s scenic Columbia River Gorge, sparking a fire that sent a plume of black smoke high into the sky. The accident happened just after noon near the town of Mosier, about 70 miles east of Portland. It involved eight cars filled with oil, and one was burning, said Ken Armstrong, state Forestry Department spokesman. Highway 84 was closed for a quarter-mile near the site, and the radius for evacuations was a half-mile. The train was operated by Union Pacific. A spokesman for the railroad didn’t immediately return calls. Silas Bleakley was working at his restaurant in Mosier when the train derailed. “You could feel it through the ground. It was more of a feeling than a noise,” he told The Associated Press as smoke continued to billow from the tankers. Bleakley said he went outside, […]

CSX Revenue Falls 14% as Coal Shipments Continue to Drop

13 Apr 2016   Coal, Railroads

CSX earnings have been hurt by the drop in coal shipments. CSX Corp. CSX 1.88 % on Tuesday reported revenue fell in the first quarter, as the volume of coal shipments, a key metric for railroads, dropped 31% to continue a trend that has hurt the top line for several quarters. In February, the Jacksonville, Fla., railroad said earnings in the latest quarter would drop significantly as the railroad expected volume to decline in the mid-to-high single digits. On Tuesday, CSX reported that total volume was down 5% for the quarter. CSX expects coal volume to decline more than 20% in 2016 and see most other markets also declining year-over-year. Some 20% of CSX’s revenue last year came from coal versus an industry average of about 15%. The company has responded by cutting costs, laying off workers and mothballing railcars. CSX’s stock has rebounded some 16% from a three-year […]

Shale gas hits U.S. railroads and diesel demand

Cheap natural gas has slashed coal traffic across the U.S. rail network and in turn hit demand for diesel, demonstrating the interlocking relationship between the country’s energy and transport systems. U.S. rail freight declined more than 6 percent in the first 12 weeks of 2016 compared with a year earlier, according to the Association of American Railroads (AAR). Most categories of bulk freight were down compared with 2015 but by far the largest drop occurred in coal, the single-largest commodity hauled on the network. The number of railcars loaded with coal in the first 12 weeks was down by 32 percent compared with 2015 (“AAR reports weekly rail traffic for the week ending March 26”). Coal loadings are down because power plants have switched to burning inexpensive natural gas, […]

Rail continues to dominate coal shipments to the power sector

26 Feb 2016   Coal, Railroads

Note: Other includes pipeline, other waterway, Great Lakes barge, tidewater pier, and coastal ports. Intermodal transit uses multiple modes of delivery. Data for 2015 are preliminary. U.S. electric power generators consumed 740 million tons of coal in 2015, fueling about one-third of total electric power generation and accounting for 92% of all coal consumed in the United States. Nearly 70% of all coal used by power plants to generate electricity was shipped either completely or in part by rail. The rest was transported by waterway, truck, or—for power plants located near a coal mine—by conveyor. The distribution of coal transit modes varies from year to year . Factors that can affect both the amount and type of coal used by power plants include the adjustment of coal requirements by plant operators, the installation of flue gas desulfurization units […]

Crude Shipments by Rail Fell 16.8% in 2015

25 Feb 2016   Railroads

U.S. crude-by-rail shipments dipped nearly 17% in 2015 as domestic crude oil production slowed, according to the Association of American Railroads. Railroads moved 410,249 carloads of U.S. crude last year, compared with 493,146 in 2014. Railroads struggled last year as plummeting commodity prices — particularly those of oil and coal — hurt volumes. Total traffic for the year dipped 2.5% to nearly 28 million carloads, trailers and containers, according to the AAR. Oil producers have cut back on drilling wells domestically as energy prices fell, resulting in a declining number of carloads. Even so, crude by rail is still just a fraction of total shipments, accounting for 1.4% of carloads last year, compared with 1.6% in 2014. Crude-by-rail carloads fell by 35.2% in the fourth quarter compared with the same quarter a year earlier.

CSX Sees First-Quarter Earnings Falling on Lower Volumes

18 Feb 2016   Railroads

The Jacksonville, Fla., railroad has been struggling with a secular decline in coal and shifts in other energy markets. The company said Wednesday that intensifying coal headwinds and the impact of the strong U.S. dollar and low global commodity prices are expected to further challenge results in 2016. CSX expects coal volume to decline more than 20% in 2016 and most other markets to also decline year-over-year. “We expect first quarter earnings to decline significantly, reflecting both this volume environment and the fact that we are cycling more than $100 million in unique items from the first quarter of 2015,” said Chief Financial Officer Frank Lonegro, speaking at the Barclays Industrial Select Conference in Miami. Analysts forecast earnings to decline 18% to 37 cents a share, according to Thomson Reuters. The company continues to target productivity savings of $200 million in 2016. Last week, CSX said it is laying […]

Phillips 66 says California rail project critical to crude supply

5 Feb 2016   Railroads

Phillips 66 says a long-proposed crude-by-rail project at one of its California refineries is more critical to supply because of the extended shutdown of an oil pipeline that ruptured last year. Jim Anderson, manager of the project proposed at its Santa Maria refinery in Arroyo Grande, California, said on Thursday that last May’s shutdown of a Plains All American Pipeline LP line has made the rail facility “more urgent.” Plains’ Line 901 moved oil produced in Exxon Mobil Corp’s Santa Ynez offshore oilfield, and production ceased when the pipeline burst. Both “were key to maintaining the viability of the refinery,” Anderson said during a webcast of a San Obispo County planning commission hearing on Phillips’ request to build the rail facility. Phillips 66 proposed the project in 2013 to widen supply options as California heavy crude output shrinks. The facility would handle just heavy crude because the Santa Maria […]

California Crude-by-Rail Plummets Amid Oil Price Collapse

29 Jan 2016   Railroads

Shipments of crude oil by railroad into California plummeted by 69 percent in 2015 amid the price collapse in oil and the shrinking difference in international and U.S. prices. California imports of crude-by-rail averaged 4,800 barrels a day in 2015, down from 15,700 in 2014, according to data released Thursday by the state’s Energy Commission. Almost all the state’s crude by train comes from New Mexico, Utah and Wyoming. “The economics of crude-by-rail are very poor right now,” Ian Goodman, president of The Goodman Group Ltd., a Berkeley, California-based energy consultancy, said in a phone interview. The difference between international and U.S. prices has narrowed, he said, and refineries are taking deliveries by water and by an improved pipeline system rather than using more expensive trains. Using rail made sense for refiners when U.S.-produced oil was significantly cheaper than imported, then a spate of deadly accidents in 2014 prompted […]

Energy-Market Slump Weighs on Big Railroads

22 Jan 2016   Railroads

The dismal energy market slammed two of North America’s biggest freight railroads in the fourth quarter, prompting them to slash jobs and driving profits below Wall Street’s expectations.  Union Pacific Corp. said it furloughed 3,900 employees last year amid steep declines in shipments of coal, crude oil and fracking sand. These, plus a sharp drop in fuel-surcharge revenue, pressured fourth-quarter profit down 22% to $1.12 billion.  Meanwhile, Canadian Pacific Railway Ltd., which has so far been stymied in an effort to take over U.S. rival Norfolk Southern Corp., said it would cut up to 1,000 jobs this year and posted a nearly 30% drop in earnings to 319 million Canadian dollars ($220 million).  The reports come a week after executives at CSX Corp. said the current pressures on rail volumes were at levels not seen outside of a recession.

View full article at www.wsj.com

Union Pacific crude volumes slide 42% on challenging oil market

22 Jan 2016   Railroads, USA

Weak crude prices and “unfavorable” spreads inhibited Union Pacific crude-by-rail shipments, the company said during its fourth-quarter earnings call Thursday. Crude shipments by Union Pacific shed 42% in the fourth quarter as the spread between domestic WTI and foreign Brent crudes averaged a narrow 33 cents/b. When the spread is that thin, it encourages imports, which cut into markets that crude-by-rail usually services. The situation is not helped by growth in pipeline capacity, either. Crude-by-rail is more expensive than pipelines — its advantage over cheaper options was flexibility and availability, but its losing those advantages as pipelines sprout across more of the country. Looking forward, Executive Vice President of Marketing and Sales Eric Butler said crude-by-rail is in for another rough year, with “significant headwinds” from the same spreads it had trouble with in 2015. Article continues below… Crude Oil Marketwire delivers vital intelligence to help you make critical […]

Oil trains sidelined by deepening slump in US shale

12 Jan 2016   Railroads, Shale Oil
Oil trains sidelined by deepening slump in US shale

The amount of oil hauled on US railways has declined steeply in the past year as refineries swallow more foreign supplies in the face of falling domestic crude output.  Tank cars, once feverishly ordered during the US shale boom, are sitting on sidings. Lessors are obtaining car rents 20-30 per cent below early 2015 — “if you’re lucky enough to keep your car in service”, said James Husband of RailSolutions, a consultancy.  From a peak in January 2015 to last October, movements of crude by rail declined more than a fifth, the latest data from the US energy department show. Genscape, a research group, said rail deliveries to US Atlantic coast terminals continued to drop to the end of the year and the spot market for crude delivered by rail from North Dakota’s Bakken region “is at a near standstill”.

Once seen as a 19th century relic, moving crude oil by train re-emerged as a hot technology five years ago as surging output from long-neglected shale oil regions overwhelmed pipeline capacity. Investors from oil companies to Wall Street banks clamoured for tank cars, while fiery accidents prompted federal regulators to impose more stringent standards on rolling stock.

View full article at www.ft.com

Oil trains sidelined by deepening slump in US shale

11 Jan 2016   Railroads

The amount of oil hauled on US railways has declined steeply in the past year as refineries swallow more foreign supplies in the face of falling domestic crude output.  Tank cars, once feverishly ordered during the US shale boom, are sitting on sidings. Lessors are obtaining car rents 20-30 per cent below early 2015 — “if you’re lucky enough to keep your car in service”, said James Husband of RailSolutions, a consultancy.  From a peak in January 2015 to last October, movements of crude by rail declined more than a fifth, the latest data from the US energy department show. Genscape, a research group, said rail deliveries to US Atlantic coast terminals continued to drop to the end of the year and the spot market for crude delivered by rail from North Dakota’s Bakken region “is at a near standstill”.

U.S. freight stalls as firms try to cut unwanted stocks: Kemp

24 Dec 2015   Railroads

Traffic on the U.S. rail network continues to weaken in a sign of the slowdown spreading across the industrial economy and efforts by firms to reverse the unplanned build up of inventories throughout the supply chain. The number of railcars and containers carried by the major railroads was down 8 percent last week compared with the same week a year earlier, according to the Association of American Railroads (AAR). For the first 49 weeks of 2015, traffic has fallen 2.1 percent compared with the same period in 2014. At the end of June, rail traffic was down just 0.9 percent year on year, according to the AAR. The slowdown in the industrial economy has deepened, with carloads carrying bulk commodities down 3.8 percent in the first half of the year, down 5.4 percent in the year to date, and down 13.2 percent year on year last week. In the […]

New York Wants Oil Companies to Treat Oil Shipped on Trains

2 Dec 2015   Railroads

New York’s attorney general is calling on federal transportation regulators to impose new safety rules governing the combustibility of crude oil shipped by rail. Attorney General Eric Schneiderman wants energy companies to treat crude oil using a process that removes volatile gases before the fuel can be loaded onto trains. These gases have been linked to fiery explosions after railroad accidents, including the deadly 2013 crash in Lac-Mégantic, Quebec. On Tuesday, Mr. Schneiderman petitioned the federal Pipeline and Hazardous Materials Safety Administration to impose a cap on the vapor pressure of crude transported by train. The rule he is proposing would require energy companies to use equipment known as stabilizers, which use heat and pressure to remove light hydrocarbon molecules such as butane and propane from the oil. While common in Texas, this equipment is rarer in newer oil fields like the Bakken Shale in North Dakota. “In New […]

Rail will temporarily fill Keystone XL vacuum

26 Nov 2015   Pipelines, Railroads

The rejection of the Keystone XL pipeline will put more oil on North American rails, but new pipelines will in time come to take up the slack, a report finds. In its record of decision on the Keystone XL pipeline, the U.S. State Department, charged with vetting the project, said there were questions about the necessity for additional North American pipeline capacity given uncertainties about the future growth of Canadian oil sands production. Analysis from industry group Genscape said crude oil production from Alberta, home to most of the Canadian oil fields, could increase 14 percent from this year’s level by the end of 2016. Genscape said the Nov. 6 decision […]

Canadian rail company eyes takeover of U.S. rival

19 Nov 2015   Railroads

Rail company Canadian Pacific said it made an offer to U.S. rival Norfolk Southern Corp. to join forces to create a new transcontinental transit entity. Canadian Pacific said it was “proposing a business combination that would create a transcontinental railroad with the scale and reach to deliver improved levels of service to customers and communities while enhancing competition and creating significant shareholder value.” Merging the two rail companies would create a network stretching to the southern U.S. border and across most of Canada . The industry, following its peers in the oil and gas pipeline sector, has faced challenges because of a decrease in coal shipments and changing needs for oil and gas transit. Last week, industry research group Genscape said leasing rates for rail car model […]

EIA: Alberta oil will move by rail

12 Nov 2015   Railroads, Tar Sands

U.S. study of post-Keystone XL energy landscape in Canada finds rail may carry more oil across the region. Photo by Steven Frame/Shutterstock WASHINGTON, Nov. 11 (UPI) — Crude oil deliveries from Alberta, Canada, will rely on rail in the wake of the permit refusal for Keystone XL , the U.S. Energy Information Administration said. The U.S. State Department last week denied TransCanada’s permit to build the cross-border Keystone XL oil pipeline. The project was designed to carry as much as 830,000 barrels of oil per day from Canada to Nebraska. From there, it would eventually send oil through the so-called Gulf Coast Project, which TransCanada put into service in 2014, and on to refineries along the southern U.S. coast Mark Cooper , a TransCanada spokesman, said saying no to Keystone XL means more of Canada’s crude oil would be sent to the U.S. market by rail, which the company […]

Railroads Lose Challenge of Oil-Train Rules

11 Nov 2015   Railroads

Railroads lost an agency appeal with the U.S. Department of Transportation in a battle over new crude-by-rail rules that require the installation of expensive new brakes on trains hauling hazardous flammable materials. In a ruling issued by its Pipeline and Hazardous Materials Safety Administration last week, the agency denied appeals challenging the new rules, including one from the Association of American Railroads. “While we understand that shippers, carriers, and tank-car manufacturers for Class 3 flammable liquids will face new challenges in the wake of these regulations, we maintain that they are capable of complying with the final rule,” the agency wrote. The rail-industry group could still appeal the decision in court. A spokesman said the organization is reviewing the decision and considering its options. The new rules, issued by the Transportation Department in May , include the phasing in of tougher tank-car standards over several years and requirements for […]

2nd train derails in Wisconsin in 2 days, spills crude oil

9 Nov 2015   Railroads

A Canadian Pacific Railway train carrying crude oil derailed Sunday in Wisconsin, the second day in a row a freight train derailed in the state. The eastbound CP train derailed about 2 p.m. in Watertown in the southeastern part of the state. The railroad said at least 10 cars derailed, and some were leaking. No fires or injuries were reported. CP was sending teams to the site. “CP takes this incident extremely seriously,” the railroad said in a news release. On Saturday, a freight train derailed near Alma in western Wisconsin, spilling thousands of gallons of ethanol. BNSF Railway said crews continued Sunday to transfer ethanol from the derailed cars and get the cars back on the tracks. The BNSF train derailed at 8:45 a.m. Saturday about two miles north of Alma, a town along the Mississippi River. Some of the 25 derailed […]

Audit Finds Montana Railroad Safety Lacking as Oil Traffic Rises

30 Oct 2015   Railroads

Montana’s oversight of railroad safety falls short at a time when crude-oil train traffic from the Bakken region, already high, is only expected to increase, a new audit found. Montana has no active rail-safety plan and employs only two inspectors to cover the state, the Montana Legislative Audit Division report released Wednesday said. In addition, there is a lack of statewide emergency planning and hazardous-material response capability should an oil spill occur, the report said. That is a potentially precarious situation with a new crude-oil transfer station in North Dakota coming online that should boost oil traffic crossing Montana from about 10 trains a week to as many as 15 cars a week. About 20% of Montanans live in an evacuation zone for an oil-train derailment, which is within a half-mile of a rail line, the report said. Two of the agencies criticized in the report said they […]

Truckers Again Becoming More Competitive With Rail

24 Oct 2015   Railroads

For years, railroads like Union Pacific have been developing their intermodal businesses of moving containers and trailers, allowing them to compete directly with truckers on their home turf. As fuel prices skyrocketed and trucking companies faced driver and capacity crunches, railroads became a logical, cheaper choice. But diesel prices have fallen by about 30% over the past year to $2.531 per gallon, according to the U.S. Energy Information Administration, something that has made trucking prices more competitive again. “I think you look at what’s going on currently in the trucking environment, the lower fuel cost is allowing trucks to be more competitive vis-à-vis rail, just by virtue of that fact,” said Eric Butler, Union Pacific’s executive vice president of marketing and sales, on an earnings call with analysts Thursday. While Union Pacific still expects to be able to grow its domestic intermodal business to record volumes for the seventh […]

Oakland Coal Terminal Becomes a Political Flash Point

19 Oct 2015   Coal, Railroads

A proposal that could make this city a gateway for Utah coal to be shipped overseas has become a political flash point and put pressure on Gov. Jerry Brown, a former mayor known for his warnings on climate change, to come out against the project. The proposed deal would grant four coal-producing counties in Utah rail access to a major commodities shipping terminal under development on city land, adjacent to the Port of Oakland, in exchange for a $53 million investment. City officials hope the redevelopment plan, on an old Army base, would bring thousands of jobs to a city that still has pockets of poverty and violence even as the region’s tech sector booms and housing costs rise. California ports in Stockton, Richmond and Long Beach export coal, but because of climate change […]

Hauling crude oil may be causing train tracks to fail

19 Oct 2015   Railroads

The only sign of trouble aboard a Norfolk Southern train, hauling roughly 9,000 tons of Canadian crude in western Pennsylvania last year, was a moderate sway in the locomotive as it entered a bend on the Kiskiminetas River. The first 66 cars had passed safely around the curve when the emergency brakes suddenly engaged, slamming the train to a stop. The conductor trudged back nearly a mile through newly fallen snow to see what happened. Twenty-one cars had derailed, one slamming through the wall of a nearby factory. Four tank cars were punctured, sending 4,300 gallons of crude pouring out of the tangled wreckage. The cause of the accident in North Vandergrift was identified as a failure in the rails — not aging or poorly maintained tracks, but a relatively new section laid less than a year earlier. The February 2014 crash fits into an alarming pattern across North […]

Exclusive: Canada railroads cut crude freight rates to lure shipments

16 Oct 2015   Canada, Railroads

Canadian rail companies are slashing rates for shipping crude in their first serious effort to revive an industry rocked by the rout in global oil prices, according to shippers and terminal operators who are seeing discounts of as much as 25 percent. The move highlights how railroads are struggling to compete with pipelines for a share of shrinking crude shipments across North America, particularly in Canada, where a long hoped-for boom in oil sands traffic has fizzled with the oil bust. Canadian National Railway and Canadian Pacific Railway, which together account for the vast majority of crude-by-rail cargoes shipped across the country, are dropping prices, four people familiar with the cuts told Reuters. The size of the cuts varied among sources, leading one source to suggest that railroads may be working with individual shippers to […]

A risky proposition: The ‘regulatory hole you could drive a train through’

29 Sep 2015   Railroads

 In early 2012, residents of this sleepy town began to notice an unusual amount of activity around the Grafton & Upton rail yard at the north end of town. An old barn that had stood for over a century was knocked down. Bulldozers came out, clearing the land. The tiny 16.5-mile railroad had been nearly defunct, but was purchased in 2008 by Jon Delli Priscoli, a major local developer with a penchant for railroads; he also owns a Thomas the Tank Engine theme park 70 miles away. At […]

After calamitous year for coal, U.S. consumers hold key for rails

28 Sep 2015   Coal, Railroads

Investors in U.S. railroad stocks, who have been punished in 2015 by an accelerating decline in high-margin coal shipments, now are pinning their long-term hopes on a resurgence in consumer spending. Their bet is that a strengthening economy will produce enough demand that railroads will be able to replace the income lost to years of declining coal use with so-called intermodal shipping – the movement of containers stuffed with clothing, furniture and other consumer goods. Thanks to environmental rules regulating power plant emissions, coal use has declined steadily since peaking in 2008. So far this year, freight volumes have tumbled 9.2 percent as low energy prices encouraged utilities to switch to burning cheaper natural gas, while the strong U.S. dollar has hurt exports. The accelerated decline this year has […]

Low natgas prices, high utility stockpiles weigh on US railroad coal volumes: executives

With myriad headwinds driving down coal shipments this year, officials with Class 1 US railroads painted a dim picture of their coal business Wednesday while speaking at the Cowen and Company 8th Annual Global Transportation Conference in Boston. In presentations broadcast online, officials with CSX, Northern Southern, Union Pacific, Kansas City Southern and Genesee & Wyoming sited low natural gas prices, mild summer weather and high utility stockpiles as the primary causes for a drop in demand. Fredrik Eliasson, CSX’s chief sales and marketing officer, said the railroad will lose about $400 million in coal business this year compared with 2014 and by the end of this year about $1.3 billion of coal revenue will have “disappeared” over the last four years. “I think it’s more and more realistic to think that where we are from a coal perspective, we’re not going to go back to kind of the […]

North Dakota gets energy transit grant

2 Sep 2015   Railroads

A grant from a federal safety regulator will help North Dakota invest in the infrastructure needed to transport oil safely and efficiently, a senator said. U.S. Sen. John Hoeven , R-N.D., said the federal Pipeline and Hazardous Materials Safety Administration granted the state about $200,000 to improve its ability to respond to incidents involving the transportation of hazardous materials like crude oil . “It’s important for us to invest in the right kind of infrastructure to move energy [resources] as safely and efficiently as possible, now and into the future,” Hoeven said in a statement. “This grant will help us do just that.” Hoeven, who serves on an energy committee in the U.S. Senate, said he’s been pushing an agenda that includes improvements in rail […]

Big Rail’s little cousins find boon in U.S. oil-by-rail bust

1 Sep 2015   Railroads

Amid the rolling mountains surrounding this quiet town in southwest New York state, tucked away on miles-long stretches of underused rail tracks, hundreds of idle oil tank cars attest to the extent of fallout from oil’s rout. The oil tank cars – a year ago sought-after to haul crude from North Dakota to New Jersey – now stand idle as a result of two converging trends: the reversal in U.S. shale oil production and the completion of new pipelines. They show how the pain from the slump in the oil-by-rail industry has spread far and wide. Big rail lines, such as Berkshire Hathaway-owned BNSF Railways or Union Pacific are losing what used to be their fastest-growing source of new traffic; refiners such as PBF Energy are left with […]

Pennsylvania’s governor issues crude-by-rail study he commissioned

19 Aug 2015   Railroads

Pennsylvania Gov. Tom Wolf (D) issued a study he commissioned in late April of issues stemming from the growing number of crude oil shipments by rail across the state. The report by Allan M. Zarembski, who directs the Railroad Engineering Program at the University of Delaware’s Civil and Environmental Engineering Department, made 27 recommendations including calls for more frequent track inspections and adoption of several voluntary safety measures. “Every week, roughly 60-70 trains carrying crude oil travel through Pennsylvania destined for Philadelphia or another East Coast refinery, and I have expressed grave concern regarding the transportation of this oil and have taken several steps to prevent potential oil train derailments,” Wolf said as he released the report on Aug. 17. “Protecting Pennsylvanians is my top priority and Dr. Zarembski’s report is important in helping my administration take the necessary steps,” he said. “I will also continue to work with […]

Rail fading from North Dakota oil transit

New pipelines operating in North Dakota have pushed the volume of crude oil by rail lower during the first half of the year, a state official said. Rail broke away from pipelines as the main source of crude oil delivery in 2012. The boom in shale oil production from the so-called Williston basin, hosting the Bakken and Three Forks shale formations, had outpaced pipeline capacity, leaving companies with rail as the primary alternative transit option. After peaking in December 2014, when the state set its crude oil production record at 1.22 million barrels per day, transport by rail has been in a general decline and is now at parity with pipeline transport. Justin Kringstad, director of the […]

TransCanada: Study shows pipeline safer than rail

15 Aug 2015   Pipelines, Railroads

Pipeline company TransCanada pointed to a study that suggests the increase in the rail transport of crude oil is a risky option for the industry. TransCanada spokesperson Mark Cooper in an emailed statement said a report from The Fraser Institute shows transport of crude oil and natural gas in Canada by pipelines is 4.5 times safer than rail. For its long-delayed Keystone XL pipeline through the United States, the company said pipelines are also substantially less carbon intensive than other modes of transit. “Federally regulated pipelines in Canada currently move just under 15 times more hydrocarbons than do the railroads,” Kenneth P. Green, the study’s lead author, said in a statement. “But with increased production and continued opposition to new pipeline […]

U.S. sets new final rule on oil, ethanol trains

30 Jul 2015   Railroads

The Obama administration on Wednesday released a new regulation intended to prevent explosive rail disasters such as the 2013 oil train derailment that killed 47 people and destroyed part of Lac-Megantic, Quebec. The new rule by the Federal Railroad Administration (FRA) requires two qualified railroad employees to ensure that handbrakes and other safety equipment have been properly set on trains left unattended while carrying dangerous materials such as crude oil or ethanol. A series of oil train accidents in recent years led the United States and Canada in May to announce sweeping new safety regulations that require more secure tank cars and advanced braking technology to prevent moving trains from derailing and spilling their contents. The new rule is […]

Rail Tank Car Orders Fall Sharply

23 Jul 2015   Railroads, Shale Oil

Orders for railroad tank cars fell sharply in second quarter, reflecting lower shipments of crude oil amid falling prices. Orders for 3,155 tank cars were placed in the quarter, down 29% from first quarter and off 70% from the second quarter of 2014, the Railway Supply Institute reported. The order backlog dropped 11% from the first quarter to 46,375 tank cars. The decline comes amid a broad decline in energy shipments at railroads. Carload volume for oil and petroleum products for the week ended July 18 was down 20% from last year and were off 2.7% in the first 28 weeks of 2015 from the same period in 2014, according to the Association of American Railroads. Meanwhile, orders for boxcars surged in the second quarter as shippers—led by the paper industry—complained of car shortages caused by railroads culling older boxcars from their fleets. Boxcar orders were 2,940 against none […]

Officials: Oil train didn’t speed before Montana derailment

21 Jul 2015   Railroads

A train that derailed and spilled 35,000 gallons of oil in northeastern Montana was traveling within authorized speed limits, federal officials said Monday as they continued to probe the accident’s cause. The Burlington Northern Santa Fe Railway train loaded with crude from North Dakota was traveling 44 miles per hour before Thursday’s wreck, U.S. Federal Railroad Administration spokesman Matthew Lehner said. Officials have said the maximum authorized speed in the area is 45 mph. Twenty-two cars on the BNSF train derailed near the small town of Culbertson. Lehner said the tank cars were a model known as the “1232,”which is built under a 2011 industry standard intended to be more crash-resistant than earlier designs. But several recent oil train crashes, including some that caught fire, also involved 1232s and federal officials are seeking to phase out the cars. The oil […]

A timeline recent oil train crashes in the US and Canada

18 Jul 2015   Railroads

The derailment of an oil train in rural northeastern Montana follows a string of accidents as shipments of crude by rail have increased dramatically in recent years, driven by a surge in domestic production: – July 5, 2013: A runaway Montreal, Maine & Atlantic Railway train that had been left unattended derailed, spilling oil and catching fire inside the town of Lac-Megantic in Quebec. Forty-seven people were killed and 30 buildings burned in the town’s center. About 1.6 million gallons of oil was spilled. The oil was being transported from the Bakken region of North Dakota, the heart of an oil fracking boom, to a refinery in Canada. – Nov. 8, 2013: An oil train from North Dakota derailed and exploded near Aliceville, Alabama. There were no deaths, but an estimated 749,000 gallons of oil spilled from 26 tanker cars. – Dec. 30, 2013: A fire engulfed tank cars […]

Montana train derailment spilled 35,000 gallons of crude oil

18 Jul 2015   Railroads

A train derailment in rural eastern Montana spilled 35,000 gallons (132,489 liters) of crude oil and forced the evacuation of about 30 people, a U.S. official said on Friday in an email to state officials. About 20 cars on the Berkshire Hathaway-owned BNSF [BNISF.UL] crude oil train went off the rails east of Culbertson, Montana, on Thursday evening, officials said. There was no fire and no injuries were reported. A hazardous materials team from BNSF responded to the scene and contained the spilled oil with earthen dams, Michael Turnbull, an official with the U.S. Department of Transportation, said in an email to Montana officials that was released to the media. The spilled crude did not reach any waterways, the email said. Culbertson authorities temporarily evacuated about 30 people from an area a half-mile around the accident site, Turnbull’s email said. The spilled crude came from three breached tank cars […]

U.S. Rails Skid Into Bear Market on Triple Whammy Cargo Slump

29 Jun 2015   Railroads

U.S. railroads, Wall Street favorites for much of the past decade, are slumping into a bear market amid a three-way squeeze from plunging coal, crude-oil and grain shipments. An index of the four largest publicly traded U.S. carriers has dropped 20 percent from its peak in November, paced by Kansas City Southern, as the companies struggle to offset the loss of volumes. They haven’t tumbled this much since 2011. Those difficulties are likely to drag on, leading to the first annual industrywide earnings decline since 2009, as low natural gas prices sap coal demand, U.S. oil drilling slows and harvests return to normal after a record crop. That threatens to crimp a rally that made the group one of the top performers in the Standard & Poor’s 500 Index. “It’s going to be a tough year,” David Vernon, a Sanford C. Bernstein & Co. analyst, said in a telephone […]

Canada files charges for Lac-Megantic disaster

24 Jun 2015   Canada, Railroads

The Canadian transport authority said it filed legal charges in connection with the Lac-Megantic oil-train disaster in 2013 under two federal acts. The federal Transport Canada said charges filed for violations of the Fisheries Act relate to the release of crude oil in and around the site of the 2013 derailment into fish-bearing waters. Charges under the Railway Safety Act relate to insufficient application and testing of handbrakes on the locomotive. Montreal, Maine and Atlantic Railway, the train’s operator, blamed the air brakes on the locomotive holding the freight for the Lac-Megantic incident and later filed for bankruptcy protection. The disaster left more than 40 people dead. “The actions taken by the government of Canada in response to this […]

Oil Firms Agree to Pay Millions in Compensation for Quebec Train Blast

11 Jun 2015   Railroads

Oil companies have quietly agreed to pay tens of millions of dollars into a compensation fund for deaths and damage caused by a 2013 oil-train explosion in Quebec, though the energy industry has maintained it wasn’t responsible for the disaster. If U.S. and Canadian courts approve the fund, the companies would be shielded from several lawsuits claiming wrongful death and negligence in connection with the tragedy. Montreal, Maine & Atlantic Railway Ltd., the small railroad hauling the crude oil, sought bankruptcy protection soon after the accident, in which an unattended train carrying oil from North Dakota’s Bakken Shale formation derailed and erupted into flames, killing 47. A trustee appointed by the bankruptcy court, who has approved the compensation fund, contended in court filings that oil producers were well aware the oil they were selling was dangerously volatile and failed to take action to make transporting it safer. Oil companies, […]