AFPM ’12: Shale boom creates railcar challenge for chem industry

02 April 2012 23:58  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--A railcar crunch continues to be a challenge for the chemical industry because so many are being used for North America shale plays like the North Dakota boom, an industry executive said on Monday.

“The North Dakota oil boom has taken a lot of railcars from industries like us,” Randy Velarde, president and founder of US-based petrochemical and polymers distributor The Plaza Group, said on the sidelines of the International Petrochemical Conference (IPC).

“The US chemical industry is doing well also so there is high demand for railcars now.”

Velarde said that leasing companies are asking for higher prices and longer terms at renewals.

“The leasing companies want us to sign up for 5-7 years now. During the recession, we could lease month to month if we wanted to."

While leasing at higher terms is a possibility, Velarde said that locating new additional railcars has proven to be a challenge.

Railcars are being built to satisfy new demand, but Velarde said it is quite possible the cars will not be finished in time.

“By the time the new railcars are built, there will be other ways of moving the oil products from plays and then we will have too many railcars.”

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC continues through Tuesday.

Author: Heather Doyle

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