US oil rail traffic will continue to grow, but slower: trade body

20 September 2013 15:45  [Source: ICIS news]

HOUSTON (ICIS)--US railcar shipments of petroleum and petroleum products will continue to rise, but at slower rates as the crude-by-rail market begins to mature, a rail industry group said on Friday.

The Association of American Railroads (AAR) said that US railcar shipments of petroleum and petroleum products rose by 18.5% year on year to 52,124 loadings in August, driven by rising crude oil shipments.

August's year-on-year monthly increase was the smallest since September 2011, the association added.

Nevertheless, “all indications are that the crude-by-rail market will continue to grow at a healthy pace” for the foreseeable future, even if that pace is less rapid than before, the AAR said.

Investments in new loading and receiving facilities were being made, tank cars are on order, and railroads are preparing to move higher volumes, the group said.

“Crude oil by rail is far more established than it was even in 2012, when year-over-year monthly growth rates were in the 40% to 50% range,” it said.

“Almost by definition, as the market matures, the more unlikely it will be to see eye-popping rates of growth but the growth will continue,” it added.

Compared with August 2011, US railcar shipments of petroleum and petroleum products were up by 74.6%, or 22,273 loadings.

Based on data from the US Energy Information Administration, railroads currently transport about 11% of US crude oil production, up from virtually none a few years ago.

In related news, US rail carrier BNSF said this week that it plans to spend an additional $400m (€296m) over the next 18 months to increase its capacities, especially in the crude-by-rail corridors of North Dakota and Montana.

By: Stefan Baumgarten
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