A. Lee Graham lgraham@bizpress.net
Fort Worth has a prime seat at the energy transportation table as oil production increases and shipping challenges intensify. That’s according to Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University in Dallas. Speaking to a roomful of rail executives this month, Weinstein noted that BNSF Railway Co. and other locally based firms are enjoying a prime opportunity as the need to ship oil from wellhead to refinery rises. “Fortunately for you guys, we have a railroad system that pretty much parallels the pipeline system,” said Weinstein, speaking at the Nov. 10 meeting of the American Short Line and Regional Railroad Association, held at the Worthington Renaissance Fort Worth Hotel.
“More and more crude oil is moving by rail tank car. The United States is really the big kahuna when it comes to oil production,” Weinstein said. That is largely due to hydraulic fracturing, the process of shooting a mixture of pressurized water, chemicals and sand underground to break apart rock and release oil and natural gas. Hydraulic fracturing in the Barnett Shale, part of which lies below Fort Worth, and other shale plays helped the nation produce 251.3 million barrels of crude in April, according to the Energy Information Administration. That’s compared with just 150 million barrels per month in 2006, before hydraulic fracking tapped more shale deposits. “We have gone from energy scarcity to energy abundance in a decade, and it all began here in Fort Worth,” Weinstein said. “This is where the so-called shale revolution began.” With the Marcellus and Utica shale plays booming in northeastern states, Bakken production accelerating in the northwest, and Barnett and Eagle Ford activity ongoing in Texas, the challenge is to move the increasing volume of production to refineries. “We don’t have enough pipeline capacity,” said Weinstein, and trucking faces its own hurdles. A national driver shortage that was slightly more than 10,000 in 2012 now stands at 35,000 and is expected to reach more than 200,000 by 2023, according to the American Trucking Associations, an industry group. That’s due to an aging driver population that’s not being replaced by younger drivers and a mobile lifestyle that doesn’t appeal to everyone, Weinstein said. Combine those factors with aging roads often in need of repair, and rail seems to make more sense, Weinstein said.
Industry operators seem to agree. About 280 million barrels of oil moved over U.S. railroad tracks in 2013 compared with less than 50 million in 2011, according to the Association of American Railroads. In North Dakota, a state enjoying robust oil production, oil shipped by rail has totaled 1.2 million barrels a day so far this year, according to the North Dakota Pipeline Authority. Less than 1 million barrels a day was shipped by pipeline in the same period. With domestic oil production expected to increase significantly for at least the next four years, according to the International Energy Agency, the need to ship oil reliably, safely and efficiently from wellhead to refinery to consumer becomes clear. “Energy logistics is the biggest challenge facing the industry today,” Weinstein said. “The bottom line is we need more rail capacity.”