Safety

For decades, gas-gathering pipelines located in rural areas largely escaped the federal scrutiny that was primarily focused on transmission pipelines. But all that has changed with final publication of the so-called Mega Rule, which applies federal pipeline safety regulations to hundreds of thousands of miles of gas-gathering pipelines — previously not subject to federal safety regulation — for the first time. In today’s RBN blog, we look at the history behind the three-part Mega Rule, what it’s designed to do, and the challenges pipeline operators will face to stay in compliance.

If 2012 was “the year of the tank car” in North Dakota then 2014 could turn out to be the year when crude by rail economics turned sour for producers. New pipelines are coming online to deliver increased volumes of crude to the Gulf Coast with more projects on the drawing board. Safety issues and traffic congestion are raising the cost of rail freight. But the biggest challenge to rail is the pressure from narrowing crude price differentials between North Dakota and coastal markets. Producers can now get better returns shipping barrels by pipeline and in a falling price market they are more incented to make the switch. Today we explain why rail may be losing its edge.

A quarter million dollars for mud?  Mud for a single horizontal well can cost that much and more.  As horizontal well laterals keep getting longer, they need that much more mud.   So the $10 billion drilling mud fluids business is growing fast.  The industry has a unique supply chain, with production, storage and distribution infrastructure that rival other aspects of the oil & gas drilling business.  But you don’t hear a lot about mud.  It is one of those unsung heroes of the shale revolution, getting little attention in industry press or the investment community. But producers know they can’t do their job without just the right mud formula.  Today we begin an in depth look at drilling mud fluid and its importance to shale drillers.

If as appears likely, US regulators impose new rail tank car safety standards by the end of 2014 including the phasing out of older designs, the cost for a new car could be as much as $150,000. Retrofitting older designs to meet new standards could range between $20,000 and $60,000 per car. The resulting higher lease costs, concerns about safety and lingering logistics issues from this past winter are leading to producers looking more favorably at pipeline projects. The latest data this week from North Dakota indicates crude-by-rail traffic out of that State fell by 11.5 % from 693 Mb/d in November 2013 to 614 Mb/d in May 2014. Today we look at the impact of these changes on future crude-by-rail traffic.

The future pace of crude-by-rail growth in North America may depend on rulings expected by the end of 2014 from the US Department of Transport (DOT) concerning rail tank car designs mandated to carry crude oil safely. The costs of replacing or retrofitting the existing tank car fleet to meet such new standards - designed to reduce the risks associated with recent high profile accidents - will pass to rail car lessors and crude shippers who will end up paying higher lease rates. Today in the first of a two part series we look at how the rail industry can comply with new tank car standards.