Wednesday, July 11, 2012

Company shuns pipelines, ships bitumen by rail

Back in Thomas's day, oil was
transported by pipeline.
Southern Pacific, a small oil sands company, expecting to start production this year, is planning to ship its produced bitumen by rail.

Their first production, from a SAGD property called STP-McKay, is expected to begin this year with a planned first phase capacity of 12,000 barrels per day. Bitumen will be trucked from the site 45 km north of Fort McMurray to the CN rail terminal at Lynton, south of Fort McMurray. There it will be put in train cars and sent 4,500 km to Natchez, Mississippi. There it will be put on barges and sent down the Mississippi to gulf coast refineries.

CN expects the amount of oil shipped by rail to increase from 5,000 containers per year to 25,000 containers per year this year. I don't know what that translates to in barrels, or which other companies are using this method.

I think this is an example of why resistance to pipelines is counter-productive. However safe shipping by truck and train and barge is, it's never going to be as safe or efficient as pipelines. If they are successful at preventing pipelines like Keystone XL and Northern Gateway from being built, environmentalists will force oil sands companies to use riskier methods to transport their bitumen.

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