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Catherine Ngai of Reuters writes a second update to her article entitled UPDATE 2-TransCanada eyes shipping oil by rail amid Keystone XL delays-CEO. TransCanada Corp's Chief Executive Russ Girling confirmed "from Hardisty in Canada, the main storage and pipeline hub, to Steele City, Nebraska, where it would flow into an existing pipeline to the Gulf refining hub," as an alternative to the Keystone XL pipeline which has been delayed for five years in political roadblocks. This would be a more costly option.

TransCanada has waited more than five years for the Obama administration to make a decision on the $5.4 billion project, which would carry up to 830,000 barrels per day of crude from the oil sands of northern Alberta to the U.S. Gulf Coast.

Canadian crude-by-rail exports jumped to 146,047 bpd in the last quarter of 2013, an 83-percent year-on-year surge, according to the National Energy Board.

Jarrett Zielinski, chief executive officer of TORQ Transloading, which is building Canada's largest unit train terminal in Kerrobert, Saskatchewan, said TransCanada would need to load at least roughly nine unit trains per day to rival the takeaway capacity of Keystone XL, if they were to load raw bitumen.

This is the first I've heard about this. Such an enormous increase in train volume would raise additional issues, including those of safety, and capacity that would have to be considered. Is the the U.S. train infrastructure does not seem sufficient to meet such an increased demand?

A few months ago I heard a report on NPR of a crises in New York state for passenger trains there where certain train lines are regularly running 12 to 13 hours late due to contract priorities with the train lines giving commercial customers priorities and coal companies have increased use of deliveries so the commercial train companies who have the contracts to provide the trains for rail service have the right to allocate available trains on a priority basis to commercial customers.

The passenger train director for that area, and I am sorry I can not remember which train line it was, was highly distressed because obviously with 12 hour delays no one can rely on such a train so it is killing business on that line.

It could also be possible that this announcement is some kind of strategic posturing. For example, perhaps TransCanada's CEO is trying to alarm those with a commercial interest in the pipeline that he is considering bailing out so they will in tern raise pressure on President Obama and Democrats to by-pass delays?

10:25 PM PT: If you enjoyed this post please check out some of these other posts I've written today or late last night.


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Comment Preferences

  •  Tip Jar (19+ / 0-)

    Humor Alert! No statement from this UID is intended to be true, including this one. Comments and Posts intended for recreational purposes only. Unauthorized interpretations may lead to unexpected results. This waiver void where prohibited.

    by HoundDog on Wed May 21, 2014 at 03:29:40 PM PDT

  •  I don't think its a bluff (6+ / 0-)

    They can make money using rail, just not as much as with a pipeline.

    “The answer must be, I think, that beauty and grace are performed whether or not we will or sense them. The least we can do is try to be there.” ― Annie Dillard, Pilgrim at Tinker Creek

    by 6412093 on Wed May 21, 2014 at 03:36:34 PM PDT

    •  Agreed, but they will never be able to ship (4+ / 0-)
      Recommended by:
      HoundDog, xaxnar, Stwriley, JVolvo

      nearly as much of this heavy sour crude to the Gulf Coast refineries by rail as they would through the KXL pipeline. It will also be far less profitable by significantly increasing transportation costs and severely limiting production.

      Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

      by RMForbes on Wed May 21, 2014 at 03:57:06 PM PDT

      [ Parent ]

      •  Far less is right... (4+ / 0-)
        Recommended by:
        RMForbes, HoundDog, Just Bob, JVolvo

        since the capacity to ship in anything like the amounts they'd need for real profitability simply isn't there. We already have a shortage of suitable rolling stock and that's only going to get worse if some of the states that are contemplating it (and would be on the lines to the Gulf) make changes to their safety regulations for transport of crude by rail.

        I tend to think this is a threat designed to try and both 1) keep investors happy in the face of KXL rejection and 2) force the Administration's hand toward approval (i.e., give us what we want or we'll do worse.) I doubt that it's actually a profitable strategy just for selling oil.

        Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat. Sun Tzu The Art of War

        by Stwriley on Wed May 21, 2014 at 05:30:46 PM PDT

        [ Parent ]

        •  Those thoughts occurred to me as well Stwriley. (1+ / 0-)
          Recommended by:

          Because my understanding is a substantial investment in the railroads would be required in both Canada and the United States, and both those efforts would no doubt encounter regulatory hurdles as well.

          I suppose it is prudent to pursue every possibility.

          Humor Alert! No statement from this UID is intended to be true, including this one. Comments and Posts intended for recreational purposes only. Unauthorized interpretations may lead to unexpected results. This waiver void where prohibited.

          by HoundDog on Wed May 21, 2014 at 05:43:50 PM PDT

          [ Parent ]

  •  after 5 yrs of delays, he needs to look for altern (3+ / 0-)
    Recommended by:
    ColoTim, HoundDog, JeffW


    His is a commercial enterprise and, whether we like it or not, after 5 years of delays and no sign that the issue will be resolved soon - or even in his favor when and if it IS finally resolved - he needs to start considering profitable alternatives to the delayed pipeline.

    Particularly if such rail transfers would NOT require U.S. State Department and Presidential approvals, that could be a better alternative for his business (even if the risk of eventual rail spills is increased).  

    •  The US also has to approve a usage change of rail (2+ / 0-)
      Recommended by:
      HoundDog, JeffW

      The wear and tear on the track and roadbeds of an additional nine trains a day plus additional safety inspections should result in something like a toll road.

      Just as trucks using highways have to be weighed in and pay tolls so too do such massive increases in rail traffic.

      As a part of climate change mediation we also need to put limits on how much countries can refine, restrict Canada's use of our refinery budget carbon caps and basically tax it according to its costs to our infrastructure in rising sea levels and other climate change consequences.

      A fair tax for the resultant damage to the East and Gulf Coasts should be around 73 trillion dollars, payable in advance please.

      "la vida no vale nada un lugar solita" "The Limits of Control Jim Jarmusch

      by rktect on Wed May 21, 2014 at 04:01:30 PM PDT

      [ Parent ]

  •  The rail line across Montana are running (5+ / 0-)
    Recommended by:
    HoundDog, xaxnar, ER Doc, Just Bob, JVolvo

    at capacity with tanker trains at the expense of grain shippers and Amtrak across the highline.

    "Go well through life"-Me (As far as I know)
    This message will self-destruct upon arrival in the NSA archives in Utah.

    by MTmofo on Wed May 21, 2014 at 03:59:51 PM PDT

  •  Well (0+ / 0-)

    The good news is there's no pipeline.

    You best believe it does

    by HangsLeft on Wed May 21, 2014 at 05:19:37 PM PDT

  •  They should have to (4+ / 0-)
    Recommended by:
    JeffW, Just Bob, nosleep4u, JVolvo

    pay a "Shipping Hazard Fee."

    -- to cover the costs of their stupidity.

    Sooner or later were going to have to: Trade in those Carbon Footprints ...

    by jamess on Wed May 21, 2014 at 06:13:28 PM PDT

  •  Keystone XL route (0+ / 0-)

    does not go through Minnesota, but a new MN law requires railroad and oil pipeline companies to help pay for safety programs

    In the wake of fiery derailments in Canada and North Dakota, Minnesota Gov. Mark Dayton on Tuesday signed into law a measure requiring railroad and oil pipeline companies operating in the state to help pay for training and programs to prepare for emergencies.

    The law empowers the state to collect a total of $2.5 million annually from railroad and oil pipeline companies until July 1, 2017. That money will help first responders get ready for derailments and spills involving oil and other hazardous substances.

    This type of legislation should be drafted in all states where oil is transported.

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