Oil, Gas, and Trains (split from the EB Troubles thread)

[neroden]

I think you're right about the correlation between all-day service and owning the line. It's an interesting point. Even on the Amtrak line in Michigan -- they are planning to have Wolverine departures spanning the day. Similarly for New York & the Empire Service. (The Hiawathas are an exception, but frankly I expect CP would rather sell off Glenview-Milwaukee, and simply hasn't had an offer yet.)

Maybe not applicable to Massachusetts's purchase of the Connecticut Valley Line, but I think Pan Am wanted to sell.

Maybe what's going on is that the freight operators like to have large "windows" with no passenger trains. With that window, it's worth the cost of owning and maintaining the line; without it, they'd rather be tenants and let someone else take care of dispatching and maintenance? (I'm not sure what to make of the RF&P, which is an odd duck in this regard, but it seems like the exception.)

Basically, the move towards government ownership of lines is going hand-in-hand with a move away from peak-focused commuter rail services and towards all-day service

Seems like it. The latter trend is very solid, so the former trend will probably continue.
If we assume that all-day service is the reason for the government ownership, then we should expect it to continue on corridors where many-trains-a-day are planned; and not on corridors with anemic one-or-two-a-day service.

----

Hmmm. There's another way to put this.

-- With anemic or peak-only passenger service + freight service, 1 or 2 tracks work. It is most efficient for these tracks to be operated by a single operator, and the freight operator is getting most of the benefit.

-- With all-day service (+ minimal freight service), 1 or 2 tracks work. It is most efficient for these tracks to be operated by a single operator, and the passenger operator is getting most of the benefit.

-- With all-day service + significant freight service, 3 tracks are generally needed and 4 tracks are desirable.

-- With 4 tracks, it makes sense to have a separate passenger pair and a separate freight pair, each owned appropriately.

-- With 3 tracks, there could be some argument over whether the passenger operator or the freight operator should own the tracks. But if the passenger operator pays for the construction of the third track and the freight operator owns it, then the passenger operator is getting cheated. Why? Because if a fourth track is built and the tracks are separated into a passenger pair and a freight pair, the passenger operator will end up paying *twice* for the third track, rather than once.

Accordingly, all-day service means that there are very strong incentives for the passenger operator to own its own tracks.

 

[Acela150]

Ok I'll settle this Pipeline BS..

Who owns BNSF?? And who was it that bailed out Bank Of America??

Warren Buffet.. Because he bought out BOA after a late night phone call from an unnamed high government official. No pipeline will be built. Why? Cause that guy who happens to be making oh about $8 Billion a year from BNSF would lose out on tons of cash.

Two words describe this...

Dream on..

Kudos to those who know the answer to the owner of BNSF.

 

[montana mike]

Hi- Line oil in the Dakota's and Montana will continue to be carried in tankers that are being built 24/7 and will continue for many years as the oil fields expands!

10-20 years by current best estimates. Then the fields will start declining.

We've got all the easy oil. The remainder are all crummy, low-return operations which run out quickly.

I love how you keep predicting the short life of these oil fields--especially when the USCGS reports that only 10% of ALL of the wells that will likely be drilled in this region have even been completed, with a drill out schedule again according to both state and federal govt sources, not industry, that runs well into the late 2020's!

I also get a big chuckle from those supposed pundits who wrote off the old fields in Texas back in the early 90's as well, stating emphatically that they would all be shut down by 2000. Here we are more than 15 years later and these "old" fields (many originally developed in the 40's and 50's) are now increasing production and are forecasted to continue for decades as well. Do you honestly think the ND, MT, US govt and BNSF people are all wrong when they are planning to map out their 50 year infrastructure plans for this region? Many BILLIONS of dollars are going to be spent over the next couple decades across the entire Hi-Line for massive transportation, utility and community infrastructure improvements......

 

[Acela150]

I hope you folks realize that there is oil all over this country.. Keep dreaming for the Oil trains to stop running.

 

[Anderson]

Hi- Line oil in the Dakota's and Montana will continue to be carried in tankers that are being built 24/7 and will continue for many years as the oil fields expands!

10-20 years by current best estimates. Then the fields will start declining.

We've got all the easy oil. The remainder are all crummy, low-return operations which run out quickly.

I love how you keep predicting the short life of these oil fields--especially when the USCGS reports that only 10% of ALL of the wells that will likely be drilled in this region have even been completed, with a drill out schedule again according to both state and federal govt sources, not industry, that runs well into the late 2020's!

I also get a big chuckle from those supposed pundits who wrote off the old fields in Texas back in the early 90's as well, stating emphatically that they would all be shut down by 2000. Here we are more than 15 years later and these "old" fields (many originally developed in the 40's and 50's) are now increasing production and are forecasted to continue for decades as well. Do you honestly think the ND, MT, US govt and BNSF people are all wrong when they are planning to map out their 50 year infrastructure plans for this region? Many BILLIONS of dollars are going to be spent over the next couple decades across the entire Hi-Line for massive transportation, utility and community infrastructure improvements......

My understanding is that hesitation about the life of the fields is part of why things got bad for the last year: BNSF didn't want to dump money into the Hi Line to deal with a 5-10 year boom in oil, and it wasn't initially clear either how long the fields would last or how much oil would be coming out of them.

With that said, I do suspect Keystone will be built. As has been said a number of times, not all oil is made equal: There's super-heavy stuff you could probably just short of use as a fire suppressant and which you do not want in your pipeline since it clogs it horribly, and there's super-volatile stuff that basically turns those FRA-111 cars into rolling bombs but that the railroads have to carry as common carriers. The former, BNSF loves to carry; the latter, I cannot help but suspect a certain amount of hand-wringing. Moreover, IIRC the target with Keystone is in no small part a bunch of Canadian oil, not the stuff in the Dakotas.

 

[jis]

Do you honestly think the ND, MT, US govt and BNSF people are all wrong when they are planning to map out their 50 year infrastructure plans for this region? Many BILLIONS of dollars are going to be spent over the next couple decades across the entire Hi-Line for massive transportation, utility and community infrastructure improvements......

Time will ultimately tell. But the fact of the matter is that overbuilding of infrastructure based on rosy projections from those that otherwise seem to be credible is not an unheard of phenomenon, and in fact is rather common. That of course does not mean that every infrastructure expansion based on every rosy projection turns out bad either. But historically those that have turned out bad generally are not that uncommon. So the thing to do is to enjoy it while it lasts.

 

[neutralist]

Keystone XL pipeline will probably relief much of the stress incurred on the tracks west of MSP.

 

[jis]

This article titled The Real Legacy of the Keystone XL Is Already Settled, suggests that that the more time passes the less important Keystone XL becomes, because quite a bit of its original purpose is now already served by alternate pipelines and infrastructure.

 

[Ispolkom]

Do you honestly think the ND, MT, US govt and BNSF people are all wrong when they are planning to map out their 50 year infrastructure plans for this region? Many BILLIONS of dollars are going to be spent over the next couple decades across the entire Hi-Line for massive transportation, utility and community infrastructure improvements......

Time will ultimately tell. But the fact of the matter is that overbuilding of infrastructure based on rosy projections from those that otherwise seem to be credible is not an unheard of phenomenon, and in fact is rather common. That of course does not mean that every infrastructure expansion based on every rosy projection turns out bad either. But historically those that have turned out bad generally are not that uncommon. So the thing to do is to enjoy it while it lasts.

That's certainly true, and it's probably not accidental that pipeline expansions out of North Dakota have had a hard time getting financing. It seems that the producers who are supposedly so sure that production will be so high aren't willing to put their money where the mouths are. Witness the collapse of the Dakota Express pipeline plan, for instance. In any case, as a former North Dakotan, I'd never consider any ND official as anything other than a shill for the oil industry. Their record on oil industry safety and pollution control shows which side they think their bread is buttered on.

 

[neroden]

So I'm going to repeat that rail capacity expansion on the High Line is probably useful regardless, for

(1) expanded grain harvests (with warmer weather and a longer growing season, the harvests have been above "expected" levels for years on end already)

(2) expanded intermodal (the Pacific shipping route from China to Seattle/Portland/Vancouver is in some ways better than the route from China to Los Angeles)

 

[Ryan]

On your (2), the route is substantially shorter due to the whole "great circle" thing.

Obviously, you can't take this exact route, but if you move the start point to the souther tip of Japan, the theory holds.



When you're only making something like 4-500 miles per day, a 900 mile difference is a big deal.

 

[jis]

So I'm going to repeat that rail capacity expansion on the High Line is probably useful regardless, for

(1) expanded grain harvests (with warmer weather and a longer growing season, the harvests have been above "expected" levels for years on end already)

(2) expanded intermodal (the Pacific shipping route from China to Seattle/Portland/Vancouver is in some ways better than the route from China to Los Angeles)

Yep. I agree with that. The rail infrastructure improvements that are happening will be useful for reasons other than the immediate motivator for such, and that is fine. As far as community development for supporting the oil drilling activities, they'll go the way of many mining boom towns when the oil is depleted.

 

[NW cannonball]

Keystone XL pipeline will probably relief much of the stress incurred on the tracks west of MSP.

The specific Keystone pipeline proposal is already dead and obsolete. Canada can exploit their tar sands as much as they can, ok good for Canada's subsidised oil industry.

But the Keystone thing is obsolete, because the frack fields in ND and Montana are cheaper, even with no pipelines, using rails = so much cheaper than the Keystone idea of pipelining expensive Athabasca crude all the way from north Canada to the USA gulf refineries.

The "Keystone" pipeline idea has been overtaken by the frack fields. Why pay Canada for cheaper domestic frack oil?

 

[iggy]

"The XL Pipeline won't effect the Hi Line in any way! Its purpose is to bring dirty shale crude that Canada doesn't want to refine due to the pollution it causes to the Houston oil and chemical processing plants so the oil can be tankered to Asia!!"

Not Asia - only China - amazing how clueless people are in this regard - you are actually close to representing true facts that no one seems to be aware of. All most all production in that area has Chinese investment - anyone who watches International news and pays attention knows this. Why? Because one of the few places in the World that still uses that low quality crap is China. Their refineries are in process of being updated to International standards. But currently they run low quality garbage that Canada can provide.

If this dirty trash were to have to be refined to our quality standards it would not be cost effective. But it is economically viable to send it to China for use. Interesting how most people in United States are completely clueless about CNPC and Sinopec. Both have major investments in Canadian oil drilling.

Also interesting how many in United States including some environmentalist in USA are completely clueless that company promoting XL Pipeline - their competitor is already running a smaller line that flew under radar - runs through Illinois other States.

 

[MikefromCrete]

"The XL Pipeline won't effect the Hi Line in any way! Its purpose is to bring dirty shale crude that Canada doesn't want to refine due to the pollution it causes to the Houston oil and chemical processing plants so the oil can be tankered to Asia!!"

Not Asia - only China - amazing how clueless people are in this regard - you are actually close to representing true facts that no one seems to be aware of. All most all production in that area has Chinese investment - anyone who watches International news and pays attention knows this. Why? Because one of the few places in the World that still uses that low quality crap is China. Their refineries are in process of being updated to International standards. But currently they run low quality garbage that Canada can provide.

If this dirty trash were to have to be refined to our quality standards it would not be cost effective. But it is economically viable to send it to China for use. Interesting how most people in United States are completely clueless about CNPC and Sinopec. Both have major investments in Canadian oil drilling.

Also interesting how many in United States including some environmentalist in USA are completely clueless that company promoting XL Pipeline - their competitor is already running a smaller line that flew under radar - runs through Illinois other States.

I guess we're not all as smart as you think you are.

 

[Ziv]

Jim, the "XL Pipeline oil will be exported" is simply a fiction that has been repeated so often that few actually realize that it is in fact wrong. The Washington Post Fact Checker points out that Obama should get 3 Pinnocios for repeating that lie. He should know better and probably does.

At least 50% of the Keystone XL oil would be refined and stay in the US as gasoline or other oil products. Less than half the Keystone XL oil would be refined and exported.

Facts are troublesome things.

http://www.washingtonpost.com/blogs/fact-checker/wp/2014/11/20/obamas-claim-that-keystone-crude-would-go-everywhere-else-but-the-united-states/

The XL Pipeline won't effect the Hi Line in any way! Its purpose is to bring dirty shale crude that Canada doesn't want to refine due to the pollution it causes to the Houston oil and chemical processing plants so the oil can be tankered to Asia!!

Hi- Line oil in the Dakota's and Montana will continue to be carried in tankers that are being built 24/7 and will continue for many years as the oil fields expands!

 

[Bob Dylan]

I used to believe the Washington Post but in this case I think they got it wrong!

I attended a State Department sponsored public hearing here in Austin last year where input and questions were allowed by all the interested parties ( ie Unions,Citizens, Refineries, Landowners, Govt officials etc.)

Some of the main facts that emerged from this hearing was Why is Canada so anxious to ship this dirty oil out of their country when they could refine it and sell it themselves if necessary?

Answer: the resulting pollution and chances for envoromential spills is not in Canada's interest!

The rep from Exxon ( largest refinery in the World) even said his company didn't care where the oil was sold and tankered to, their only concern was the profit they'd make from doing the refinery work!

Will there be lots of permanent jobs created?

Answer: No, only during the construction sequence and in Texas, a Right to Work, Anti- Union State, the jobs wouldn't even be permanent!

The claim that there is a shortage of crude to refine is not true, Texas is experiencing oil booms all over the State and Oil and Gas is flowing like water so to speak! In fact the world is awash in oil, hence the recent sharp decline in gasoline prices!

This has become a political football, Repubs vs. Demos and there is lots of hyperbole on both sides but based on the info I have found the Republicans and The Washington Post deserve a " Pants on Fire" Award for their distortions and Lies!

If this oil is so great why not keep it up North and let the owners, the Canadians, handle it? YMMV

 

[NW cannonball]

Trying to guess what pipeline (with or without huge taxpayer subsidies)

Theres the totally worthless "jobs - jobs - you can get $40/ hour in Williston just for driving truck ! Go there !. (AND PAY $2k/month to live in a "man camp" -- and, like one EB pax told me -- weel - the moneys good, but I had to give up my girlfriend")

Boomtown.

Actually

There is no way to know or to guess how long the Williston boomtown will be.

Right now, with the continuing global recession, and the OPEC losing megabucks on the short-term demand going away --

No way to predict. No way.

That`s why Warren alias BNSF invests so little on the Hi-line. Short-term - lose a lot of grain and coal customers, but the China container trade --

Amtrak #7 #8 is just lost in the gigabucks

BUT a short-term short position in Berkshire Hathaway might be a winner - or not.

 

[NW cannonball]

This holiday connected with old friends.

Who spontaneously over T-day dinner mentioned -- "that explosive different crude oil train that runs near my house" and "Amttrak EB -- forget it" and "when BNSF delivers coal or grain 0 yahh that'll be the day"

I did't ask these people, they just bitched about BNSF on their own. At a Turkey day family get-together.

 

[PaulM]

Facts are troublesome things.

A rhetorical device that calls a "fact" something that may or may not happen in the future that's based on business and political decisions that haven't yet been finalized, if made at all, is also troublesome.

 

[jis]

Very often people have great difficulty differentiating amongst fact, opinion and speculation. In many cases so called "fact checking" turns out to be evaluating how a proposition compares with ones favored opinion or speculation, and reporting the result as a "fact check".

Sent from my iPhone using Amtrak Forum

 

[Ziv]

The fact is that a liberal newspaper admits that saying Keystone XL oil will be exported is about 3 Pinnochios worth of a lie. That is pretty significant.

There is no way to say that oil shipped on the Keystone XL in the future would absolutely be used here in the US, but it is interesting that the mantra that it would almost all be exported is probably not even close to being true. The Fact Check article by the Washington Post may or may not be proven to be perfectly accurate in the years to come, but it is a fact that they made the assertion that Obama's statement was worth 3 Pinnochios, which is a fairly blatant lie.

So I guess the next effort will be to claim that the Washington Post is actually a conservative paper. LOL!

Again, this isn't my Fact Checker, this is the Washington Post, that bastion of conservatism.

Facts are troublesome things.

A rhetorical device that calls a "fact" something that may or may not happen in the future that's based on business and political decisions that haven't yet been finalized, if made at all, is also troublesome.

 

[jis]

Well, whether a paper is liberal or conservative is also to some extent a matter of ones opinion, and is not a "fact"

Sent from my iPhone using Amtrak Forum

 

[neroden]

That`s why Warren alias BNSF invests so little on the Hi-line. Short-term - lose a lot of grain and coal customers, but the China container trade --

Actually, I don't begrudge BNSF the decision not to invest in the Hi-Line based on the theory that the boom was going to subside. It was a defensible decision (though I still think the grain boom and China container trade make expansion worthwhile).

I *do* begrudge them their decision to prioritize (new) crude oil shipments over their existing loyal customers. Who are not so loyal any more. That was a bad business decision. BNSF could equally well have delayed the oil trains -- oil's in no hurry, it can just stay in the ground until the railroad is good and ready to accept it -- while running Amtrak, grain, and containers on time.

Well, whether a paper is liberal or conservative is also to some extent a matter of ones opinion, and is not a "fact"

Maybe in the US.
In the UK, a number of newspapers are very plainly and admittedly allied with *particular political parties*. I actually prefer that -- puts all their cars on the table. You know whether you're reading the Tory paper, the Labour paper, the LibDem paper, the BNP paper, or the Communist paper. (And if they agree on something, it's probably true.)

I have no use for the US myth of "objective" journalism. It was invented as an excuse for William Randoplh Hearst to establish newspaper monopolies ("see, it's OK if there's only one newspaper, becaue it's objective"). All journalism has an opinion slant, and I prefer the British style where they're quite blatant about what it is -- it's more honest.

Unfortunately, at this point I consider zero of the national newspapers in the US to be reliable sources. Zero. Their biases are in favor of *status quo conventionalism*, or "whatever is common wisdom", which is a particularly bad bias. I have been relying on cross-checking from foreign press and specialty press, both of which are more reliable.

Frankly Keystone XL is a bit of a tempest in a teapot -- there's some argument about whether it has any significant impact on the oil situation at all. I've been following the major trends in the energy markets, which are huge. It looks like with Saudi downward pressure on the oil price, the tar sands just became completely uneconomic, and most of the fracked shale oil also became uneconomic.

The Saudi government apparently (I haven't double-checked this, it's secondhand information) explicitly said that their plan was to stop this environmentally damaging US drilling. They will obviously succeed.

----

Oil doesn't compete directly with solar power. There's a complex market interrelationship because *both* compete with natural gas (methane). Methane & solar are both used to produce electricity. Solar, electricity and methane are all used for home heating. (Oil is grossly uneconomical for heating now -- costing 60% more than electricity -- and people are switching away as fast as they can.) Electricity and solar are both used for cooking. Oil & methane are both used for industrial processes. Oil, methane, and electricity are all used for transportation.

In recent years, a lot of industrial operations and heating have switched from oil to methane due to the relative prices. From what I can tell (and my analysis was very back-of-envelope), the current drop in the price of oil will *not* change that.

The pressure on natural gas prices from people switching away from oil can only go so far, however. When natural gas passes certain prices, it becomes cheaper for electric utilities to install solar; this price has already been reached for some utilities in some areas. Solar is cheaper every year, so this price keeps dropping.

Meanwhile, total electricity demand keeps dropping, which is a pressure downward on electricity prices.

Part of this is an accounting artifact, since rooftop solar looks like a demand reduction in the national statistics. Whereever solar is cheaper than the grid, it starts replacing grid power en masse.

The other part is the switch from incadescents to LEDs, which cuts about 97% of lighting electrical load. Lighting load used to be a lot of electrical usage, so this is creating massive spare grid capacity.

Since methane is floating near the price where electricity is cheaper -- and a lot of people can see the writing on the wall -- the switch to electricity and the switch to solar will continue, and will continue to accelerate. This keeps methane prices down below a "ceiling" price. Even with current drops in price, the oil price continues to stay at a level where methane is cheaper for many industrial processes. This means that industrial users (who are using oil or methane for chemical reasons, not merely for energy) will continue to switch from oil to methane whereever possible. And of course the heating oil users are still switching. So oil demand will continue to drop over the 5-10 year term.

 

[MARC Rider]

I care a bit about the Hi-line passenger run - however slow - it's usually better than driving US 2 -- from now til April driving US 2 will be -- "delete expeletive" -- sometimes difficult.

MEANWHILE -- the EB has problems running through the New World's equivalent of Siberia.

Is US 2 really that bad in the winter? I was out here a few years ago, and, admittedly there was no snow (though it was 10 below), and it seemed that US2 was a perfectly good highway that you can drive at 70 mph with no problem, even if it is 2 lane.

As to Siberia, I just saw a documentary about Siberia, and from that, I would say that the Hi-Line is nothing at all like Siberia. For one thing there a ;ot more good roads that cross it. The New World equivalent of Siberia is Alaska and northern Canada. (Sorry to nitpick, but couldn't help it,

Here's a link to the movie:

http://www.slate.com/articles/arts/movies/2013/01/werner_herzog_s_siberia_documentary_happy_people_reviewed.html