Railroads See Shipments Rise For Crude and Petroleum Products

The amount of crude oil and refined petroleum products moved by U.S railroads increased 9% during the first seven months of this year compared with the same period in 2013, reports the Energy Information Administration (EIA) citing data provided by the Association of American Railroads (AAR). In July, monthly average carloadings of oil and petroleum products were near 16,000 carloads a week, according to AAR. The increase in oil volumes transported by rail reflects rising U.S. crude oil production, which reached an estimated 8.5 MMbbld in June for the first time since July 1986.

AAR estimates that more than half of the nearly 460,000 carloads tracked in its petroleum and petroleum products category from January through July consisted of crude oil, up from around 3% in 2009. With the average rail tank car holding about 700 bbl of crude oil, approximately 759,000 bbld of crude oil were moved by rail during the first seven months of 2014, equal to 8% of U.S. oil production.

The Bakken Shale, primarily in North Dakota, has provided a significant share of the total increase in U.S. oil production over the past three years, notes EIA. North Dakota, now the second-largest oil producing state, provides nearly one out of every eight barrels of oil produced in the U.S. Between 60% and 70% of the more than 1 MMbbld of oil produced in the state has been transported to refineries by rail each month in the first half of 2014, according to the North Dakota Pipeline Authority.

In the future, proposed rules published in August by the U.S. Department of Transportation to improve the safety of tank cars will affect how crude oil is moved by rail, particularly trains that carry 20 or more carloads of oil. The proposed rules would require new oil tank cars constructed after October 2015 to have thicker steel, and require retrofitting of existing tank cars. Voluntary actions by railroads in anticipation of the new rules have resulted in reduced speeds and increased inspections.