Better Arrival Time for EB so far!

[TraneMan]

Thanks to lower gas price, This was posted by one of the crew member on the EB. "So we were early into chicago. We have barely had any freight traffic heading home. A Williston North Dakota oil worker told us that because of the low oil prices at 59 dollars a barrel North Dakota oil has basically stopped production. Oil needs to be at least 75 dollars a barrel for North Dakota oil to be profitable. With the cut in production comes less oil trains which bids well for the Empire Builder. ON TIME TRAINS!!!!!! HOW NICE!!!!!! My informant told me this can continue possibly up to 2 years!!!!!"

 

[SarahZ]

Yeah, it's been around $2.28/gal here for the past week. I love it.

 

[Bob Dylan]

Now if we could just get Winter to go away on the Hi-Line there's a strong possibility the Builder can get back to its old Schedule and a consistently good OTP like a few years ago before BNSF got too greedy!

And to paraphrase an old saying, BNSF put all its Oil into One Basket, wonder if the farmers and other shippers will now get improved service and if the oil workers will start heading for other boom areas like Southern Texas??

 

[TraneMan]

I was thinking of that too, hope BNSF is taking care of those other people, and get the coals to the power plants that needs coal to run full power again.

 

[Henry Kisor]

Um . . . there's this from today's Minneapolis Star Tribune:

"Updated rail traffic reports obtained by the Star Tribune indicate even more Bakken oil trains now cross Minnesota, with most shipments passing through the Twin Cities. On the Canadian Pacific Railway through the Twin Cities, the average number of oil trains has risen to nine per week, compared with four in June, according to a Dec. 1 report filed by the railroad with Minnesota authorities and released under the state Data Practices Act.

"Bakken oil trains, typically of 100 tank cars or more, carry at least 1 million gallons of crude oil each. Many are destined for refineries on the East Coast or eastern Canadian provinces.

"BNSF Railway, an even bigger hauler of North Dakota crude, reported in November a change in traffic patterns for oil trains, running fewer trains through far southwest ­Minnesota. But the traffic levels — a range of 37 to 52 oil trains per week — remained unchanged, the report said. Up to 39 BNSF oil trains pass through the Twin Cities per week, the railroad reported."

 

[adt1982]

I have not noticed any decrease in oil trains on the BNSF here in Illinois.

 

[seat38a]

I was told by couple of the Amtrak attendants and conductors on the Surfliner that if Amtrak LD trains arrive on time, then its a sign that the economy is not doing well. Meaning not enough freight commerce is traveling on the rails. Absent increased capacity via added tracks etc., LD trains arriving on time consistently probably means the economy somewhere is taking a hit.

 

[neroden]

Well, seat38a, that's only true if the Class Is are violating their statutory obligation to prioritize passenger trains.

What you *should* be seeing from your train window if the economy is doing well, is a freight train in every siding you pass; and on double-track lines, a constant stream of freight trains on the line going the other way.

 

[TraneMan]

Here's a brief story on the ND Oil.

 

[Steve Manfred]

They're all back to being very late today.

 

[Paul CHI]

There is a steep decline in exploration for new production, but existing production won't drop all that fast. However, shale sources don't produce for a long time, and there is a significant reduction within a couple of years, so "eventually" the northern oil traffic should diminish. However, some areas and producers are very efficient and can probably make money at $30/bbl.

Then there's the grain harvest....

 

[neroden]

Yeah, there's that grain harvest. Did BNSF ever get this year's harvest delivered, or are there a bunch of spoilage claims?

 

[TraneMan]

They're all back to being very late today.

BNSF hit a truck on the track so that's why the delay.

 

[montana mike]

Thanks to lower gas price, This was posted by one of the crew member on the EB. "So we were early into chicago. We have barely had any freight traffic heading home. A Williston North Dakota oil worker told us that because of the low oil prices at 59 dollars a barrel North Dakota oil has basically stopped production. Oil needs to be at least 75 dollars a barrel for North Dakota oil to be profitable. With the cut in production comes less oil trains which bids well for the Empire Builder. ON TIME TRAINS!!!!!! HOW NICE!!!!!! My informant told me this can continue possibly up to 2 years!!!!!"

Not correct at all. Most ND oil is profitable at $40/bbl. This according to both my personal contacts (who own both rigs and wells in ND and MT) and the API. Look at the BNSF loadings for the energy trains. No significant change in that at all. Only down slightly. Other categories are also down slightly. My local BNSF people say it is a combo of all of the construction being done for the season, the main ag push behind us for the Fall, and the fortuitous good weather the Hi-Line is experiencing (no major storms) as well as new crews and equipment finally coming on line.

 

[neroden]

I do not believe for a minute that most ND oil leases are profitable from scratch at $40/bbl (new drilling). Some are, certainly, most aren't.

Of course, the most profitable and productive wells were drilled first, so I suppose you could say that most of the *oil* is profitable at $40/bbl, but that's misleading.

Also, obviously, once you've got a well started (sunk costs), the breakeven price is way lower. Existing wells are relatively cheap to keep operating, so they would shut producing only when their production rate drops to really low levels (in 5-10 years in the case of typical fracked wells, somewhat longer in North Dakota).

The effect of lower oil prices is to reduce new drilling, not to reduce existing production. Well, it's a bit different when the company owners have the sense to "stockpile" oil in the ground under existing wells to wait for higher prices; Saudi Arabia has been known to do this, as has Exxon; but the fracking companies have a business model (heavy debt) which doesn't allow for that.

Anyway, my point is, the thing to watch (if you're watching for business effects of the lower oil price) is the loadings on the frac sand trains, not the loadings on the oil trains.