Analysts: Oil-by-rail still attractive

Jan. 22, 2014 at 7:56 AM

HOUSTON, Jan. 22 (UPI) -- A series of high profile accidents in North America involving crude oil transportation by rail won't deter the industry, energy analysts say.

U.S. legislators are calling for a closer look at the regulations governing the rail sector following a series of accidents involving the transportation of crude oil by rail.

Ankur Jajoo, an analyst with market research company Frost & Sullivan, told energy news website Rigzone the industry would continue using rail as a transit option so long as it makes economic sense.

"The industry looks to save where it can," he said in an interview published Tuesday. "If using rail is more economic versus trucks, then that is what companies will use."

The National Transportation Safety Board said about 950 barrels of oil spilled when two trains operated by BNSF Railway collided and derailed near Casselton, N.D., in late December. No injuries were reported in that incident, though a derailment in July of a train carrying crude oil left more than 40 people dead in Lac-Megantic, a town in Quebec, Canada, after the tankers caught fire.

An increase in North American crude oil production has put a strain on existing pipeline capacity, prompting energy companies to look to rail as an alternative transit option.

Rigzone cites a report from consultant group Ernst & Young that says rail may offer more options in terms of destinations when compared with pipelines.

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