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A Tank Car Train for Hire – NGLs on the Rails

Unlike pipelines that take a long time to build and only deliver to a handful of destinations, rail freight cars offer the flexibility to deliver anywhere across North America. The rail freight industry can load, store and transport different NGLs (including those NGL products that must be transported under high pressure) as well as crude and petroleum products. Rail infrastructure is mostly already in place so new routes can easily be brought on line. That’s why rail freight has been used successfully by the energy industry for over 100 years as - a “pipeline on wheels”. Today we look at the rail tank car business for moving NGL and petroleum products.

The Network

The rail network in North America is made up of a few very large railroads and scores of smaller regional systems (see map above).  There are seven big freight systems that operate in the U.S., designated Class I railroads:  Burlington Northern Santa Fe (BNSF), Canadian National Railway (CN), Canadian Pacific Railway (CP), CSX Transportation (CSX), Kansas City Southern Railway (KCS), Norfolk Southern Railway (NS), Union Pacific Railroad (UP) and Ferromex (FXE).  A Class I railroad has annual operating revenues of $250 million or more.   Class II and III railroads are smaller regional carriers.

As of June 2012, there were just over 1.5MM revenue generating (locomotives, maintenance equipment, end of train/cabooses not included) rail cars in North America. Tank cars make up about 300,000 of the railcar fleet - 75,000 of them high pressure tanks designed to carry hazardous gases shipped under pressure (liquefied). The latter have thicker tank walls and better valves and fittings and most have special features to improve crashworthiness.

It takes a high pressure rail car to move propane, normal butane and isobutane.  These NGL products, generally referred to as LPGs (liquefied petroleum gasses) have high vapor pressures and must be transported in vessels that can withstand that pressure.  Y-grade (mixed NGLs containing ethane) can be carried in high pressure cars provided that the ethane content is minimal.   The ethane in the mix must be low enough not to trigger inadvertent hydrocarbon releases and/or damage the tank car).  Ethane has a vapor pressure well above the threshold for even high pressure tank cars.

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