CALGARY, Alberta – Midstream oil and gas companies continue to use alternative means of transporting oil to market, especially by rail, and rightly so considering the prevailing differential on Western Canadian Select oil prices due to the glut of oil sitting in Alberta.
Until provincial and federal governments grow up and approve a number of pipelines, these companies have few options to move their product to market – until now.
Trans Canadian Pipelines has teamed up with Western Rail to create the world’s first trainpipe, much to the chagrin of federal regulators. The companies describe their new mechanism for safe oil transport as, “part train, part pipeline, and all good.”
“My CEO counterpart over at Western Rail and I (not to mention our oil producing clients), were getting fed up waiting for the guys on the other side to get their act together and finally approve the blasted NGP. So over coffee a few weeks ago, I sat down with Mr. Alloce (President of WR), to discuss an idea that I had in the shower, and he loved it. And after checking regulations, there’s no question we’re doing it.” – Richardo Herrera, TCP CEO
According to the press release, the companies plan to extend an empty train, car-by-car, from Fort McMurray to tidewaters near Burnaby, BC, – the train would span the entire distance between the 2 cities.
The companies would then start construction, by removing the end-caps on every car, and then weld in a cylindrical length of steel between each car to connect them. In effect, the companies would build a pipeline out of the train cars. After a series of pressure tests, the companies plan to pump diluted bitumen from Fort McMurray to Burnaby, where it can be loaded onto tankers and transported to eastern markets.
A spokesman for the companies claim that the its patented trainpipe solution is far safer and enviro-friendly than traditional oil-by-rail because the trainpipe does not move. Mr. Alloce continues, “If the ‘train’ does not move – by virtue of having its wheels welded to the tracks – the chances of it being derailed are slim to none, and slim just skipped town. We feel that it is a win-win-win for all involved, and what’s more, the plan is in full accordance with all regulatory considerations.”
“There is nothing we can do to prevent these companies from creating this ‘trainpipe’ contraption. In the current regulations, the trainpipe does not fit the technical definition of a pipeline, so it does not need approval from us before it can be constructed. Nor is it technically a train since, by definition, trains must be able to move. Our hands are completely tied, TCP and WR were able to exploit a loophole in the rules and we currently have no recourse to take. Dammit.” – Diver Muffinson, head of the Western Canadian Pipeline Regulatory Group
Oil and gas industry analysts, and opponents to the idea, claim that the trainpipe idea is not economically feasible. And with an estimated cost of $104B to run roughly 100,000 train cars over a 2,000 km span, weld them together, and then pump crude through them, they might just have a point.
Oil and gas companies say nuts to that, and they are already planning out at least two, and perhaps three, routes for a trainpipe to take Alberta oil to Canada’s east coast.
2P News will keep readers posted as details on this proposal become available.