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US Energy Transportation Network Gets Multibillion-Dollar Revamp 124

Posted by samzenpus
from the fixing-the-pipes dept.
Hugh Pickens writes writes "Simone Sebastian writes in the Houston Chronicle that the nation's energy transportation network is undergoing a multibillion-dollar overhaul, as oil and natural gas production surges in new regions of the country and energy producers charge into new areas with technology that can reach oil and natural gas trapped in shale and other tight rock formations leaving pools of crude and gas stranded far from the Gulf Coast refineries and petrochemical plants that need them. 'Where it used to be isn't where it is now. Where it needs to go isn't where it used to go,' says Terrance McGill, president of fuel carrier Enbridge Energy. 'You're seeing this fundamental shift of crude oil across the country.' For example Phillips 66 CEO Greg Garland says his company is considering buying 2,000 more rail cars that could carry an additional 150,000 barrels a day from shale regions (PDF) to its refineries across the country because the glut of crude oil pouring out of the newly tapped shale oil plays like North Dakota's Bakken has kept the price of Mid-Continent crude at a record-wide discount of up to $27 per barrel relative to its rival European benchmark Brent crude because there is not enough pipeline capacity to get Bakken crude to Gulf coast refineries. 'That's a pipeline on wheels,' says Garland. 'You'll see us stepping out and doing some more things around infrastructure. Like everyone else, we're doing everything we can to get more barrels in front of those facilities.'"
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US Energy Transportation Network Gets Multibillion-Dollar Revamp

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  • by crazyjj (2598719) * on Monday July 02, 2012 @04:05PM (#40520591)

    How come all the oil and gas companies keep expanding like this and all the solar companies keep going bankrupt? Wasn't it supposed to be the other way around? Damned hippies lied to me again.

    • by jdastrup (1075795) on Monday July 02, 2012 @04:27PM (#40520883)
      Hopefully these new 2000 rail cars can be modified to transport solar and wind energy to bring these Energies of the Future to locations where they are currently unavailable. Even better if the locomotives are corn powered. Or, just grow the corn on the trains using the solar energy they are transporting and we'll have perpetual energy trains.
      • Just put a turbine on top of the train so it can power itself when it moves forward. Dah.

      • Really mods?? +5 Interesting? Is this your protest of not having a +1 hyperbole? Or +1 greenpeace gone wild? Or is this a ploy to wear out my '?' key?
      • by AmiMoJo (196126)

        High voltage DC power lines. The EU is planning to run them from north Africa back to the mainland. Scotland is already exporting large amounts of electricity.

        The problem has been solved, we just need to build the infrastructure. Fortunately we already have a pretty good network of over-ground pylons to use.

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      China took our solar tech, mass produced panels at a loss to flood the market, and drove the innovators out of business. Now we're stuck with 5-year old tech because China is the only game in town, and they're not innovating. If China competed fairly, the innovators would have found ways to get panel production costs below what they currently are. The price of panels would be even lower than the Chinese price, which is losing them money.

      Hopefully, the new tariffs on Chinese solar panels will help correct

      • It also doesn't help that while the government subsidizes solar power companies to an extent; it's a paltry level of support compared to the oil company subsidies. It's unlikely that solar by itself will be able to replace carbon fuels anytime soon, but we it could easily provide a much greater percentage of power than it does if it got a little support.

        • It also doesn't help that while the government subsidizes solar power companies to an extent; it's a paltry level of support compared to the oil company subsidies.

          Oh, really? What "subsidies" are the oil companies getting?

          Name two of them. Please.

          • by bigtrike (904535)

            Oil field privatization in IRAQ due to war spending, CIA coups to overthrow leaders that interfere with US owned oil interests. Oh, also the tax breaks for exploration: http://www.us.kpmg.com/microsite/taxnewsflash/2012/Jun/061812%20GG%20and%20IDC%20Part%20II.pdf [kpmg.com]

            • by sycodon (149926)

              In case you missed it, U.S. Oil companies lost out badly when it came to getting drilling rights in Iraq.

              And then we have the standard, "we're not taking as much money from you as we could, so it is a subsidy" line of thought.

              • by bigtrike (904535)

                I could have sworn that us companies got more than $0 in drilling rights in Iraq, but you are suggesting otherwise. Would you prefer that the solar power companies and everyone else get the same tax reduction as well?

                • by sycodon (149926)

                  Ha!

                  You have to be making money and paying taxes before they can reduce your taxes.

                  Maybe I just jinxed it and some idiot will introduce earn income tax credits for companies.

            • by Anonymous Coward

              You do realize that no US oil corporations were awarded any of the top tier contracts in Iraq as the result of the war? Oh, I'm sure there will be some US sub-contractors who make some money by providing engineering and operational services.
              And how does the CIA overthrow a country? Do they have some secret million man army to do it? Do they say "do what I say or we will nuke you?" During the cold war and even today the smaller nations always play one greater power off another to make sure they get the best

          • Re: (Score:2, Informative)

            by Anonymous Coward
        • by cpu6502 (1960974)

          What subsidies do the oil companies get to make oil/gasoline/diesel cheaper?

        • by kenh (9056)

          "It also doesn't help that while the government subsidizes solar power companies to an extent; it's a paltry level of support compared to the oil company subsidies."

          Seriously?

          We subsidise the research into solar panels, we subsidise the production of solar panels, we subsidise the purchase of solar panels, and we subsidise the price utility companies pay for the electricity the panels produce. We also subsidise the training of the workers that install and maintain the solar panels.

          What are the massive oil

          • You forgot the lack of a carbon tax or cap and trade system for co2 emissions. That's a massive subsidy of today's oil companies by future generations who will be paying to re-do the economy as a whole in a world of greatly warmed climate, shifted arable zones, an acidified ocean, and enviro-wars.

            • The lack of a tax is not a subsidy.

              • unless the levels of taxation are assymetrical; i.e. unless there are more categories of deductions and greater levels of deductions for one industrial sector compared to other sectors of the economy. Then it would be a subsidy. I think if you study the details there is a a subsidy by this definition for the fossil fuel industry.

      • by cpu6502 (1960974)

        I don't understand this belief that the U.S. could build solar panels cheaper than China. We can't build iPhones and other electronics cheaper than China.

        • They come at it backward.

          Start by assuming the Obama admin's solar company loan guarantees were not kickbacks to his supporters then make up 'facts' to support your position.

      • by m.dillon (147925)

        There is no 'solar tech'. China mass-produces standard panels for the most part, and those plants produce large quantities of toxic byproducts in doing so which they pretty much just dump into the environment. The solar industry in China also seriously over-produced their panels and wound up with piles of them as other countries (aka Europe, Germany in particular) pulled back subsidies for various reasons.

        Solar panel companies in the US simply cannot compete against that, not unless you want to create env

    • by Anonymous Coward

      Your cheap Solar Panels are in China, waiting to be shipped over on request.

      Anybody who is even SLIGHTLY aware of the reality of solar panel prices has seen the price per watt decline to under 2 dollars.

      The only reason US companies are going bankrupt is because Chinese subsidies are impossible to compete with.

      Thanks for paying attention.

      • by kenh (9056)

        But maybe, if we borrow ever more money from China, we can figure out some way to make simple, labor-intensive products like solar panels as cheaply as China - the first steps will be to lower worker wages and forget about those silly environmental concerns... In order to beat China at their own game we need to become China.

    • How come all the oil and gas companies keep expanding like this and all the solar companies keep going bankrupt?

      Well, that's what those tree-huggers get for relying on government subsidies.

      Oh, wait...



      natch.

    • by sl4shd0rk (755837) on Monday July 02, 2012 @04:57PM (#40521213)

      How come all the oil and gas companies keep expanding like this and all the solar companies keep going bankrupt?

      For one, Koch Bros., and others like them, pretty much own the Republican party in the USA. It comes in handy when you want to make sure emerging technology doesn't threaten your empire.

      Secondly, too many people just don't care and more would rather eat up lies and witch-hunt drama because it's easier than figuring out the facts. This keeps seats in the senate full of corporate sponsored asshats who in turn pass votes to allow things like alternative energy solutions to be derailed before posing a threat to the oil empire.

      • by sycodon (149926)

        I had a 100MPG carburetor and the Koch brothers bought it from me fro $100,000.

        I tried to sell them my engine that ran on water but they said they had one already.

      • Re: (Score:2, Insightful)

        by kenh (9056)

        Koch Bros.?

        Those are the evil task-masters that are controlling the world energy markets?

        Let's compare federal government subsidies for solar and wind power to the entire revenue stream of Koch Bros... Which is greater?

        How can little-old Koch Bros. control the world oil/energy market? They have near zero influence over the President/Senate...

        According to Rolling Stone magazine [rollingstone.com], the Koch Brothers have poured about $100 MIllion over the past 30 years into supporting organizations, politicians, and think tank

    • dropped the price of natural gas that even coal plants ramp down. Solar was barely approaching the old price point of power generation and then fracking hit. Combined with the nuclear scare and countries exploring alternatives the money landed on wind power because its currently a better option than solar.

      • Fracking has been used since the 1950's. The only thing that really has increased the use of fracking is that oil prices have gone up enough to support spending several million dollars per well to complete the job.

        Now that the shale gas people have done such an excellent job dropping wells, there is a relative glut and the price goes down. Enjoy it while you can - won't last terribly long. Big problem with shale (either oil or gas) is that the depletion rates are quite high - you pump out a well in years

    • by kenh (9056)

      "How come all the oil and gas companies keep expanding like this and all the solar companies keep going bankrupt?"

      Because solar panels are not cost-effective, not yet anyway, and the massive government subsidies are being poured into "production facilities" not basic research.

      It reminds me of the bee in "The Bee Movie" that kept slamming into the glass [youtu.be] because he didn't understand the concept of glass "Maybe this time," "Maybe this time," "this time," this time..."

      Solyndra was the quintesential example of

    • Because the oil and gas companies already have distribution and logistic systems in place. Plus solar panels can be described as risky when used to power critical systems. Home solar power use would require homeowners to spend quite a bit of money to convert. Just like alternative fuels for automobiles would require car owners to either purchase new cars capable of using bio-filters and natural gas as a power source. I honestly beleive there will come a time when oil use will decline but it will most likel

    • by jcr (53032)

      If you want cheap solar panels, you'll have to smuggle them from China. Those idiots in the federal government can't decide which political constituencies to pander to, so they've slapped ridiculous tariffs on solar cells made in china.

      -jcr

    • How come all the oil and gas companies keep expanding like this and all the solar companies keep going bankrupt? Wasn't it supposed to be the other way around? Damned hippies lied to me again.

      What is really sad about solar is that is paying no taxes, highly subsidized because it has not ROI, and still fails.

    • by Tamerlin (940577)

      How come all the oil and gas companies keep expanding like this and all the solar companies keep going bankrupt? Wasn't it supposed to be the other way around? Damned hippies lied to me again.

      Maybe you should try listening to something beyond fox "news" since the solar industry has been growing, and not that many of the companies in the industry have gone belly-up. That said, the hydrocarbon industry is spending a lot of money to get politicians to continue giving them subsidies while seeking to prevent renewable energy developer from succeeding...

  • by presidenteloco (659168) on Monday July 02, 2012 @04:11PM (#40520703)

    You may as well be discussing the pros and cons of the new heroin shipping routes.

    The fossil fuel addiction is just as destructive and involves the same level of denial of reality.

    Specially for tech people. Get off the obsession with oil based technology and make us some seriously steampunk alternatives that work.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      Fossil fuels are a lot more than just fuel.
      Petroleum is the starting point for all our organic chemistry.
      Whatcha gonna do about that?

    • All we need is a reliable, compact, and cheap way to store a week's electric energy for a typical household.

      • by jdastrup (1075795) on Monday July 02, 2012 @04:30PM (#40520907)
        We have it. It's called Uranium.
      • by SirGarlon (845873)
        We have several reliable, compact, and cheap ways to store that amount of energy. The trouble is, they're all fossil fuels.
    • by Anonymous Coward

      An overhaul to the US energy transportation network.

      Not the energy production methods, no, just the way we transport it around.

      Yeeeeeeah. I'm wondering what codename this initiative has. "Operation Ignore Those Damn Godless Commie Hippies At All Costs"? "Operation Fingers In Our Ears And Singing Loudly"? "Operation Deck Chairs On The Titanic"?

    • by steelfood (895457)

      Steampunk? And from where will that steam get its energy?

    • by couchslug (175151)

      Heroin addiction is far less a problem than the legal consequences creating a vastly profitable black market, Government REACTION to heroin creates far worse problems then would a supply of cheap, clean smack .

      In contrast, fossil fuel addiction doesn't have a "safer mode".

  • ... leaving pools of crude and gas stranded...

  • The very best part of the Houston Chronicle article comes after the end, in the "We Recommend" section:

    "Tokyo man cooked own genitals, served to diners"

    I'd click on it, but I'm at work.

  • This smacks me as being a bit odd and inefficient. Given the volume being produced, wouldn't a pipeline make more sense? It'd be safer and cheaper in the long run. Of course, given the troubles the Keystone XL pipeline is having, maybe it's more economic to truck it than to try and get through all the red tape for a pipeline.
    • by Amtrak (2430376)
      I agree a pipeline would be more efficient in the long run if the supply keeps flowing. However, given how much the environmental moment hates, pipelines, fracking, and Oil in general they have created a dis-economy where Business people have to make the rational decision to use an inefficient solution because the red tape is less cumbersome. Now, if we had regulators that were not ideological against the industry they were trying to regulate or a product or regulatory capture by a few large players maybe w
    • by jdastrup (1075795)
      You answered your own question. The word "Pipeline" is as bad a the word "Nuclear" to the earth-worshipers.
    • by drinkypoo (153816)

      You know, we have the technology to build pipelines that won't leak. We use them in chip fabs, where they use materials that can slaughter everyone for miles downwind. It would increase the cost by more than a factor of two, but the environmental cost of leaks is nothing to sneer at.

    • by rrohbeck (944847)

      The current state of affairs has managed to keep gas prices down in the US because the crude price is depressed.
      With the pipeline, gas prices will go up because the price of WTI will rise to the same level as Brent.
      So I say don't build the pipeline. All it'll do is increase the profits of the oil producers, at the cost of the consumers.

  • by Alworx (885008)

    Oh... I thought this was about burying power cables... so that you stop getting blackouts every time a whiff of wind topples some tree along the street!

  • Finally (Score:1, Troll)

    by Sparticus789 (2625955)

    Hippies: Don't build a pipeline, it will destroy the environment
    Oil Companies: Fine, we'll put it on a train, create more CO2, and refine it anyways.
    People: Look, gas is down to $2.75 a gallon!

    • Taxpayers: Sure, you can have your pipeline... if you want to pay for it yourself.
      Oil Companies: Fuck that, without your money paying for it, that shit's too expensive! We'll just buy more trucks to run on existing infrastructure. People: Look, gas is down to $2.75 a gallon!

      FTFY.

      • Oops, forgot a page break.
      • Taxpayers: Sure, you can have your pipeline... if you want to pay for it yourself. Oil Companies: Fuck that, without your money paying for it, that shit's too expensive! We'll just buy more trucks to run on existing infrastructure. People: Look, gas is down to $2.75 a gallon!

        FTFY.

        Oddly, I can find no real evidence that the oil companies want anything from the taxpayers other than to get the permits approved allow them to build the pipeline.

        Note, by the by, that 2000 rail cars, plus the fees associated with

        • Taxpayers: Sure, you can have your pipeline... if you want to pay for it yourself. Oil Companies: Fuck that, without your money paying for it, that shit's too expensive! We'll just buy more trucks to run on existing infrastructure. People: Look, gas is down to $2.75 a gallon!

          FTFY.

          Oddly, I can find no real evidence that the oil companies want anything from the taxpayers other than to get the permits approved allow them to build the pipeline.

          Think subsidies, tax abatements, right-of-way waivers... lots of ways to get at taxpayer monies indirectly.

  • Why not build an actual pipeline [torontosun.com] from the middle of the country to the Gulf region, where the refineries are?

  • I don't know how far the transportation network extends, but the first sentence of the summary goes on, and on, and on...

  • by trims (10010) on Monday July 02, 2012 @05:47PM (#40521715) Homepage

    I'd be interested in seeing a good analysis of exactly WHY something like the Keystone XL pipeline (or the OP's huge number of railcars) is necessary for shipping crude to the Gulf Coast.

    I realize that 80% of the US's refineries are on the Gulf, but, given a couple of things:

    • The tar sands are *relatively* clumped together in Alberta
    • After a re-alignment of oil sources, the vast majority of tar sands oil will be used domestically (Canada and USA)
    • building a refinery is expensive, but we need the extra capacity anyway
    • refining close to the tar sands extraction site reduces the total requirements for transport of the final products (i.e. the oil source to refinery to recipient); that is, not only do you reduce the total volume of end product being produced (as refining 1 gallon of crude produces under 1 gallon of end-products), but you can ship end products essentially directly from the tar sands to end-users. Given that the distance from the Gulf to the end-users is no shorter than from Alberta to the end-users, this saves a whole lot of transportation costs for the crude oil.
    • what's the cost differential between building the Keystone XL vs a large refinery (or a couple) up in Alberta?

    Something similar goes for the various Shale gas extractions - I would think that it would be far better to build power generation (since that's where 90% of the gas is going to go) right near the gas fields, and then spend money on an upgraded Power Grid, rather than try to ship the gas around to existing power stations.

    Basically, I think we're falling into the trap where we just assume that transportation is less expensive than co-location of end use. I'd far rather pay for another refinery and gas power stations (added capacity) AND a better power grid, than cough up the same amount for just another couple of pipelines (which, frankly, all they add is environmental disaster potential).

    -Erik

    • by haruchai (17472) on Monday July 02, 2012 @07:10PM (#40522405)

      Even with the pipeline, refining close to the point of extraction really makes sense for tar sands.
      The stuff is heavy and nasty and the "dilbit" or diluted bitumen that has to be made out of it so it can flow is much, much worse than normal crude.
      It's more corrosive to the pipe and more noxious and toxic when spilled.

      • by m.dillon (147925)

        The raw output from the tar sands is way too heavy to be refineable, it still needs to be diluted with light natural gas liquids first... the same stuff they use to dillute it for pipeline transport, minus a few refinement stages (btw, the US exports some of the lighter NGLs coming out of the shales to Canada for this purpose).

        But it makes no sense to refine the output up there far away from consumers. What are they going to do, truck the gasoline down several thousand miles? They'd go out of business try

    • Just depends on which is easier to transport - oil or electricity. One would think that pushing electrons would be more efficient and cost effective than hauling hydrogen-carbon chains across the continent, but that isn't necessarily true.

      • Stupid submit button...

        The other part of the equation is that it's hella expensive to build a refinery from scratch. AFAIK, there have not been any completely new refineries built in the 'developed' world for decades - there is simply too much opposition for it. The only new refineries are in China, Indonesia, Saudi Arabia and Venezuela and similar places where you can push through large developments easier.

    • by roman_mir (125474)

      I'd far rather pay for another refinery and gas power stations (added capacity) AND a better power grid, than cough up the same amount for just another couple of pipelines (which, frankly, all they add is environmental disaster potential).

      - you know what's funny, years of comments here, explaining that the real infrastructure cannot be built artificially by government, it has to come from the actual market need, and then a company wants to put down a freaking pipe and everybody is yelling about it.

      A pipe is infrastructure, it's PRODUCTIVE infrastructure, unlike bridges and overpasses to nowhere. Environmentally speaking, the companies that are building the pipeline should have to buy or rent the land they are using from private owners, not

  • by m.dillon (147925) on Monday July 02, 2012 @06:55PM (#40522287) Homepage

    It just seems odd. This is more a business article than anything else, and there is nothing new and cool about buying rail cars.

    Our domestic pipeline infrastructure has been on a building spree for a decade. If any of you are investors, that's been the basis for the Oil&Gas MLP buildout that has been maturing at a very fast clip since the mid-2000's, continued right through the crash, and continues to mature at a modestly fast clip today and probably for another 10 years at least before the core-buildout slows down.

    Generally speaking transport for OIL and NGLs (Natural Gas Liquids) can start out in tankers and rail cars but ultimately cost efficiency requires a pipeline to be built. And you have no choice for natural gas... its pipeline or nothing pretty much since compression to CNG or LNG levels is way too expensive (and way too dangerous) for domestic transport.

    But it takes several years to build a long pipeline, costs billions of dollars, and requires both shippers and receivers to enter into long term 10-year+ contracts with guaranteed volume flow or investors wouldn't finance the pipeline in the first place. Because no actual revenue flows until the pipeline is complete.

    There are a dozen major producing areas but in layman's terms the bottleneck is mainly in the North->South direction these days. EastWest has capacity now (though numerous major cities on the east coast still have bottlenecks). Existing pipelines in the north-south direction are essentially maxed out.

    The Keystone pipeline saga is your typical talking-head/exaggerated/public-unaware crap. Pipelines criss-cross the U.S. already, there are already numerous (but maxed out) pipelines coming down from Canada all the way to the gulk, and Canada is a major trading partner whos major oil and gas reserves are essentially land-locked. Sure, they have some transport to the coasts for export, but they need to be able to drop down through the border into the U.S. markets and we also have an export market of our own going northward of light NGLs which the Canadians use for a multitude of purposes in their oil-sands operations. It's as much a diplomatic issue with our northern neighbor as it is anything else.

    -Matt

    • The Gulk of Mexico.

      I kinda like that.

  • http://youtu.be/lkswXVmG4xM [youtu.be]

    I'm not saying it's true. But what if it is? What are the implications? What if these petroleum corporations would put their billions of dollars into researching and developing technology that's just waiting to be used?

    These people who claim to be witnesses were trusted to the utmost, including some who were trusted with nuclear launch authorization codes. No nuts would be given a job like that.

  • Close to Gulf oil plays, yes. But it also makes exporting pork-subsidized crude and natural gas to more lucrative foreign markets mere childs play. That's the main reason for Keystone XL transporting corrosive tar sands instead of refined products: the option to export it instead of lowering domestic US prices by even five cents.
  • There's a reason Warren Buffett bought a railroad and GE (makes the engines...) ... and a reason the Administration blocked a pipeline for their best-buddy in Omaha who spews the "I need to be taxed more" message for them.

    Back, meet scratcher.

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