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US Energy Transportation Network Gets Multibillion-Dollar Revamp
Hugh Pickens writes writes "Simone Sebastian writes in the Houston Chronicle that the nation's energy transportation network is undergoing a multibillion-dollar overhaul, as oil and natural gas production surges in new regions of the country and energy producers charge into new areas with technology that can reach oil and natural gas trapped in shale and other tight rock formations leaving pools of crude and gas stranded far from the Gulf Coast refineries and petrochemical plants that need them. 'Where it used to be isn't where it is now. Where it needs to go isn't where it used to go,' says Terrance McGill, president of fuel carrier Enbridge Energy. 'You're seeing this fundamental shift of crude oil across the country.' For example Phillips 66 CEO Greg Garland says his company is considering buying 2,000 more rail cars that could carry an additional 150,000 barrels a day from shale regions (PDF) to its refineries across the country because the glut of crude oil pouring out of the newly tapped shale oil plays like North Dakota's Bakken has kept the price of Mid-Continent crude at a record-wide discount of up to $27 per barrel relative to its rival European benchmark Brent crude because there is not enough pipeline capacity to get Bakken crude to Gulf coast refineries. 'That's a pipeline on wheels,' says Garland. 'You'll see us stepping out and doing some more things around infrastructure. Like everyone else, we're doing everything we can to get more barrels in front of those facilities.'"
How come all the oil and gas companies keep expanding like this and all the solar companies keep going bankrupt? Wasn't it supposed to be the other way around? Damned hippies lied to me again.
What political party do you join when you don't like Bible-thumpers *or* hippies?
You may as well be discussing the pros and cons of the new heroin shipping routes.
The fossil fuel addiction is just as destructive and involves the same level of denial of reality.
Specially for tech people. Get off the obsession with oil based technology and make us some seriously steampunk alternatives that work.
Where are we going and why are we in a handbasket?
I agree a pipeline would be more efficient in the long run if the supply keeps flowing. However, given how much the environmental moment hates, pipelines, fracking, and Oil in general they have created a dis-economy where Business people have to make the rational decision to use an inefficient solution because the red tape is less cumbersome. Now, if we had regulators that were not ideological against the industry they were trying to regulate or a product or regulatory capture by a few large players maybe we could get rid of the unnecessary red tape. Of course if pigs could fly I would probably have a flying car as well...
Oh... I thought this was about burying power cables... so that you stop getting blackouts every time a whiff of wind topples some tree along the street!
dropped the price of natural gas that even coal plants ramp down. Solar was barely approaching the old price point of power generation and then fracking hit. Combined with the nuclear scare and countries exploring alternatives the money landed on wind power because its currently a better option than solar.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
I'd be interested in seeing a good analysis of exactly WHY something like the Keystone XL pipeline (or the OP's huge number of railcars) is necessary for shipping crude to the Gulf Coast.
I realize that 80% of the US's refineries are on the Gulf, but, given a couple of things:
Something similar goes for the various Shale gas extractions - I would think that it would be far better to build power generation (since that's where 90% of the gas is going to go) right near the gas fields, and then spend money on an upgraded Power Grid, rather than try to ship the gas around to existing power stations.
Basically, I think we're falling into the trap where we just assume that transportation is less expensive than co-location of end use. I'd far rather pay for another refinery and gas power stations (added capacity) AND a better power grid, than cough up the same amount for just another couple of pipelines (which, frankly, all they add is environmental disaster potential).
-Erik
There are always four sides to every story: your side, their side, the truth, and what really happened.
You forgot the lack of a carbon tax or cap and trade system for co2 emissions. That's a massive subsidy of today's oil companies by future generations who will be paying to re-do the economy as a whole in a world of greatly warmed climate, shifted arable zones, an acidified ocean, and enviro-wars.
Where are we going and why are we in a handbasket?
It just seems odd. This is more a business article than anything else, and there is nothing new and cool about buying rail cars.
Our domestic pipeline infrastructure has been on a building spree for a decade. If any of you are investors, that's been the basis for the Oil&Gas MLP buildout that has been maturing at a very fast clip since the mid-2000's, continued right through the crash, and continues to mature at a modestly fast clip today and probably for another 10 years at least before the core-buildout slows down.
Generally speaking transport for OIL and NGLs (Natural Gas Liquids) can start out in tankers and rail cars but ultimately cost efficiency requires a pipeline to be built. And you have no choice for natural gas... its pipeline or nothing pretty much since compression to CNG or LNG levels is way too expensive (and way too dangerous) for domestic transport.
But it takes several years to build a long pipeline, costs billions of dollars, and requires both shippers and receivers to enter into long term 10-year+ contracts with guaranteed volume flow or investors wouldn't finance the pipeline in the first place. Because no actual revenue flows until the pipeline is complete.
There are a dozen major producing areas but in layman's terms the bottleneck is mainly in the North->South direction these days. EastWest has capacity now (though numerous major cities on the east coast still have bottlenecks). Existing pipelines in the north-south direction are essentially maxed out.
The Keystone pipeline saga is your typical talking-head/exaggerated/public-unaware crap. Pipelines criss-cross the U.S. already, there are already numerous (but maxed out) pipelines coming down from Canada all the way to the gulk, and Canada is a major trading partner whos major oil and gas reserves are essentially land-locked. Sure, they have some transport to the coasts for export, but they need to be able to drop down through the border into the U.S. markets and we also have an export market of our own going northward of light NGLs which the Canadians use for a multitude of purposes in their oil-sands operations. It's as much a diplomatic issue with our northern neighbor as it is anything else.
-Matt