BNSF Railway Abandons Plans to Buy Tanker Cars

Crude by Rail
Crude by Rail

Citing ‘customer complaints’, the BNSF railway has abandoned plans to buy 5,000 crude oil tankers.

Typically, leasing companies or oil companies own the tank cars that move crude along the tracks and not the railroads themselves. But last year, BNSF requested proposals from railcar manufacturers to produce cars for them that were stronger and safer cars than the current DOT standards. The company had hoped that producing cars with thicker shells, reinforced ends and thermal blankets would reduce the risks of using trains to haul oil.

Over the past two years, BNSF Railway has been involved in a number of incidents including a derailment and fiery crash that caused the evacuation of a small town in North Dakota just last week. The company confirmed that the eight cars that derailed were the unjacketed CPC-1232 models that the federal government would like phased out by 2020 due to safety concerns.

Related: Bakken Crude Train Derails

A company spokesperson commented about the company’s decision to scrap the plans by saying, “If our customers do not want us in this business, we’ll re-evaluate. We’ll do something else.

The debate over rail safety is continuing to escalate and just last month, NTSB urged stricter standards due to findings from study of recent train derailment accidents. They concluded that the current fleet of DOT-111 tank cars rupture too quickly and result in spillage and ignition.

Related: Crude by Rail Facing Tougher Standards

Rail Lines Face Bottlenecks in Bakken

Oil Rail Car Image
Oil Rail Car Image

At the Surface Transportation Board (STB) hearing this week in Fargo, ND, officials from the state and other upper Midwestern states urged U.S. regulators to put pressure on railroads to fix issues that are blocking grain shipments. The culprit some believe is the oil & gas industry - in August, approximately 60% of oil produced in North Dakota was transported out of the state by rail, and some argue the railroads are favoring oil companies over agriculture.

Bloomberg reported, as grain produced last year sits in storage, waiting for trains to carry it to market, the bottlenecks may get worse as an anticipated record grain harvest begins, officials warned.

John Hoeven, the Republican Senator from North Dakota, said at the hearing, “the bottom line is that we need greater rail capacity to meet the growing needs of North Dakota’s expanding economy and dynamic businesses and farms. To make that happen, railroads must commit to investing in more rail infrastructure, including more locomotives, more railcars and more crews.

In June, the board ordered the railroads to provide weekly updates on bottlenecks. Regulators can order railroads to prioritize certain shipments over others, although that power is rarely used, the Bloomberg article noted.

BNSF Railway, along with Canadian Pacific Railway Ltd., was directed by the STB to appear. Earlier in 2014, BNSF said it would hire 5,000 workers and add 500 locomotives to expand its network. The company said it’s spending $390-million on expansion and maintenance projects in North Dakota in 2014. Since 2009, traffic in and out of North Dakota has increased by 144% on BNSF.


Bakken Job Market Expected to Boom in 2014 - Again

Oil and gas operators in the Bakken are on a hiring frenzy as they look to fill long-term positions. Investments have shifted from exploration to development and that means more full-time positions are coming open with the major operators and service companies. That means even more Bakken Jobs in 2014 - Search HERE.

We’re excited to significantly boost our employee base in response to the growing demand among energy industry customers for our services.
— Mark Johnsrud, Nuverra's CEO

A few of the businesses hiring include:

  • Power Fuels - Nuverra
  • BNSF
  • Pumpers
  • Rig contractors
  • Completion crews


Indigo Resources Building Bakken Rail To Barge Facility in Osceola, AR

Rail to Crude Barge Facility Osceola AR
Rail to Crude Barge Facility Osceola AR

Indigo Resources Ltd plans to build a rail to barge facility in Osceola, Arkansas, to improve movement of Bakken and Canadian crude to Gulf Coast markets.

A 610-acre site at mile marker 784.5 on the Mississippi River will have 3,000 ft of river frontage, three sets of manifolds, five rail loops, and 16 miles of track with room for 100+ car unit trains. The site has direct rail access to Minot and Tioga, with shipments moving as much as three times faster than long rail hauls to the Gulf Coast. Increased speeds lead to higher tank car utilization or to put it another way - cost savings. Deliveries are expected to take less than 10 days and savings is estimated at $1-2 per barrel compared to rail alone.

Tomas Fuentes, project manager, stated "Unit trains will be able to come directly from Minot or Tioga without hitting any rail yards or switching stations."

A total of 15 refineries with 3.4 million barrels per day of demand is downstream of the site on the Mississippi River.

The terminal will have the capacity to unload two unit trains of light crude per day and three to four manifest trains of bitumen per week.

"Combining rail and barge will lower the overall cost to the market" explains John Park, Director of Indigo Resources Ltd. "Plus due to our location, Indigo will be able to turn around the unit trains faster and in today`s high cost of rolling stock, this is an added bonus."

The terminal will allow for crude movement to the lower Mississippi at cheaper rates than rail. The terminal will have a total of two million barrels of storage capacity:

  • 4 x 250,000 bbl tanks
  • 10 x 100,000 bbl tanks

The facility will be flexible enough to handle multiple crude types and Indigo Resources expects deliveries from Canada, Colorado, Montana, North Dakota, and Wyoming.

Construction is expected to begin in the fourth quarter of 2013 and the facility should be in service in late 2014.