Tuesday, March 22, 2016

Oil By Rail Drops 25% at BNSF Railway

If anyone needs proof that oil production is down in the shale play in America, look at railroads’ rapid decline in hauling oil in 2016.
BNSF Railway, the largest hauler of crude by rail, has seen a 25.7 percent decline in carloads of petroleum through Week 10 year to date; and Canadian National Railway’s shipments of oil dropped 14.4 percent through Week 11 YTD.
BNSF Railway shipped 75,322 carloads of oil through Week 10, down 25.4% from 101,373 carloads shipped through Week 10 2015.

In 2014 BNSF often hauled 10,000 to 11,000 carloads of petroleum per week, but has trended down over the past 15 weeks to 7,600 carloads per week.
Canadian National Railway’s oil by rail volumes have trended down to 5,000 per week from 6,500 per week a year ago.
Drilling for new oil has fallen off.
The U.S. rotary rig count from Baker Hughes was down 4 at 476 for the week of March 18, 2016. It is 593 rigs (55.5%) lower than last year. Rig count is at the lowest level since Baker Hughes started counting rigs in 1949.
Much of the oil hauled by BNSF Railway is from the Bakken play. 
A Bakken well's production may decline by more than half in the first year -- this is a much faster drop than conventional oil wells, because shale has very low permeability.

BNSF also has seen 31 percent decline in coal volumes and a 31 decline in metallic ores, but an 11.72 percent increase in intermodal units shipped.
BNSF's total volumes were down 3.53 percent YTD.
All Class I North American railroad volumes remain in a slump. 
Union Pacific's volumes were down 8 percent year to date through Week 11, with coal down 36 percent, metallic ores down 31 percent and no growth in intermodal shipping this year.

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