EIA: Crude oil, products account for biggest rail shipment increase

Crude oil and petroleum products accounted for the biggest increase in railcar loadings among commodities in 2012, the US Energy Information Administration reported, while coal had the largest decline.

About 90% of the crude oil and petroleum products in the US typically are transported by pipeline.

But increasing amounts of crude are being moved by rail from unconventional oil and gas areas, such as the Bakken formation, which do not have adequate pipeline infrastructure to transport the oil to refineries.

Last year, the amount of crude oil and petroleum products delivered by rail increased 46% over 2011, or almost 171,000 carloads, according to the Association of American Railroads (AAR).

Crude oil accounted for an estimated 38% of the combined deliveries in the oil and petroleum products category during 2012, up from 3% in 2009. The trade group says that crude oil was responsible for nearly all of the growth last year in carloadings in this category.

Phillips 66 agreed last month to a 5-year contract with Global Partners LP for shipment of Bakken crude to Phillips 66 Bayway refinery in New Jersey (OGJ Online, Jan. 9, 2013).

The commodity with the biggest decline in railcar loadings during 2012 was coal, which was down about 726,000 carloads, or nearly 11%, to just over 6 million carloads. But coal remained by far the dominant category of carload shipments, accounting for 41% of total carloads, compared to a 4% share for all petroleum and petroleum products combined.

More than 70% of the coal burned by power plants for electricity generation is delivered by rail. These deliveries fell in 2012 because of lower demand from power plant operators, who turned to more price-competitive natural gas as a generating fuel.

Coal accounted for 37.2% of US electricity generation through November 2012, based on the latest data from EIA's Electric Power Monthly, down from 42.5% during the same 11-month period in 2011. Electricity generation from natural gas increased from 24.6% to 30.8% over the same time.

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