Railway To Heaven

14 Sep 2018; 

Large oceangoing tankers are generally considered the most cost-efficient way to move crude oil over long distances across the world.  Pipelines are a quick, reliable and cost effective alternative although by their nature, they are less flexible.  Crude by rail (CBR) is a third option for long haul transportation of oil, more expensive than pipelines but providing more flexibility for overland transportation.  Due to the significant existing railroad infrastructure in North America, CBR offers significant geographical flexibility as well as responsiveness to changes in demand.  As a result, crude by rail was a significant factor in the distribution of crude oil in the U.S. during the period 2013-2015, when shale oil production was ramping up and U.S. crude oil exports were still restricted to Canada.  After the U.S. crude oil export ban was lifted, the Brent-WTI spread narrowed which made it cheaper for coastal refiners to import foreign crudes by tanker.  Total CBR movements in the U.S. (domestic and from Canada), dropped from a peak of 1.14 million b/d in October 2014 to 273,000 b/d in September 2017.  As the Brent-WTI spread has expanded again, CBR movements have started to increase, primarily from the Bakken region to the U.S. East Coast. 

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