09.27.13

When it comes to phrase-making for business, good English is optional. We were reminded of this truism by an article appearing in Bloomberg News about the decline in new pipeline projects for the oil and gas business, due to the narrowing of spreads in crude prices, which in some cases means that the cost to ship oil by pipeline from the Midwest to Gulf Coast plants is more than the potential profit.

Now reluctant to commit to long-term pipeline deals, shippers are increasingly turning to rail transport (and to our client, BNSF Railway, in particular), since rail offers greater flexibility for North American producers and refiners.

Three new pipeline projects with price tags totaling $5.3 billion have apparently been canceled or delayed in the past 10 months. In contrast, rail, which typically requires shorter-term contracts than pipelines, is now carrying nearly 70% of the crude oil from the prolific Bakken shale in North Dakota, up from 28% less than a year and a half ago. The amount of crude from the Bakken reaching the East and West coasts by rail may jump fourfold in 2013, according to an analysis by industry experts Wood Mackenzie.

John Auers, senior vice president at Turner, Mason, remarks about the flexibility of rail in the Bloomberg article and is quoted as saying, “Everyone wants optionality.”

Want to learn more about BNSF’s flexibilty and excellence supporting the oil and gas industry? Your best option is to see bnsf.com/shale, the microsite SullivanPerkins has produced to tell the story.