Proceedings magazine is a communication tool for the Coast Guard's Marine Safety & Security Council. Each quarterly magazine focuses on a specific theme of interest to the marine industry.
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8 Proceedings Fall 2015 www.uscg.mil/proceedings remain the most popular transport option, carrying about two-thirds of U.S. oil and petroleum products. Nevertheless, the EIA reports that the amount of crude oil and refned petroleum products moved by U.S. railroads increased nine percent during the frst seven months of this year compared with the same period in 2013. In July 2014, monthly average oil and petroleum product loadings were near 16,000 carloads per week, according to the Association of American Railroads, which estimates that more than half of the nearly 460,000 carloads tracked in its petroleum and petroleum products category from Janu- ary through July consisted of crude oil, up from around three percent in 2009. With the average rail tank car hold- ing around 700 barrels of crude oil, about 759,000 barrels of crude oil per day were moved by rail during the frst seven months of 2014, equal to eight percent of U.S. oil production. In addition to Bakken crude oil, which constitutes the larg- est single portion of U.S. CBR shipments, Canada's heavy crude oils are increasingly being moved by rail. In 1998, Canadian National acquired the Illinois Central railroad, linking the nation's Chicago rail hub with the Gulf Coast and New Orleans, making it the dominant rail provider in Alberta, where Canada's heavy oil sands lie. All told, volumes have increased substantially in recent years, more than doubling since 2012. Some heavier crude oils are easier to move by rail than by other means. Canadian bitumen cannot be readily trans- ported by pipeline unless it is diluted with lighter petroleum hydrocarbons to reduce its viscosity. While diluted bitumen is moved by rail, rail cars that are equipped with heating coils can transport undiluted bitumen. In some instances, rail cars that would otherwise be empty carry diluent mate- rials on "backhauls" from the U.S. to Canada, increasing the cars' overall utilization. There are other synergies between rail and crude oil production — in addition to transporting flexibility in routing, more supply chain diversification options, faster speed to market, better volume scalability, and shorter-term contracts. CBR can be an effective bridge to pipeline construction in some cases, and offers fexibility in handling rapidly expanding production by transporting crude oil to markets with limited pipeline access. 3 However, rail is not in a position to replace pipelines. Accord- ing to the Energy Information Administration, pipelines LNG Exports While LNG export cost/beneft analysis is complex and subject to debate, EIA recently evaluated the efects of increased levels of LNG exports on U.S. energy markets and reached the following general conclusions: ► Increased LNG exports will lead to increased natural gas prices. ► Natural gas markets in the U.S. balance in response to increased LNG exports mainly through increased natural gas production. ► Supply from higher domestic production is augmented by reductions in natural gas use by domestic end- users, who respond to higher domestic natural gas prices. ► Increased LNG exports result in higher total primary energy use and energy-related CO 2 emissions. Consumer expenditures for natural gas and electricity increase modestly with added LNG exports. ► Added U.S. LNG exports result in higher levels of economic output, as measured by real gross domestic product. ► Added U.S. LNG exports result in higher levels of domestic consumption expenditures for goods and services. Endnote: EIA, "Efect of Increased Levels of Liquefed Natural Gas Exports on U.S. Energy Market," October 2014. Natural Gas Withdrawals and Production (Millions of Cubic Feet)