-- Edited by FMB on Friday 18th of January 2013 02:23:08 PM
Uke said
2:06 PM, 01/18/13
Those idiots at Bloomberg are spouting wishful thinking, and rumors. They wouldn't know the difference between Brent crude and Bakken, nor for Alberta 'tar'! That BN-SF-CN marriage was something that Krebs spouted after BNSF... Him and CN's CEO/Pres. Paul Tellier, at the time were hoping ta pull off... But smarter heads prevailed!
The whole thing was a 'get rich(er) quick(er) scam' that the ICC/STB put the kibosh on right quick! But I digress...
Canada has already granted access ta both CN, and CP ta ship crude (tar oil) east and west on its lines. The North Dakota crude (not Brent), Bakken oil can be shipped via BNSF ta Washington's 3 refineries, or ta Texas.
Seems ta me there's an overproduction problem, rather than the opposite. And somebody, perhaps Uncle Warren himself is behind the merger rumors.
f 2LARRCO is that concerned, why doesn't Buffet petition the energy dept. for a permit ta build a new refinery in North Dakota? There's yer ready solution. In fact BNSF already own a hell of a lot of property in ND. A state go-ahead, and Uncle Sam/Obama/EPA, and other regulatories would need ta sign off ta give a green light ta such a project, but it can be done. Bein' a big hurry won't cut it though!
We haven't seen a 'newly-built' refinery in over 30 years... All that can happen is refurbishing/updating old refineries...
The continuing oil boom in North Dakota and Texas has created a unique opportunity for railroad consolidation.
Berkshire Hathaway's (BRK.A) Burlington Northern would be the company doing the consolidating. They are the only major line that has access to the North Dakota Bakken fields, and they have a line running from Houston to Eagle Pass that can easily serve the Eagle Ford shale fields.
What Burlington lacks is direct access to eastern refineries that are now spending up to $110 per barrel, the Brent price, for their oil. West Texas prices of $95/barrel sound good, but they are sub-optimal for producers.
Even if the President approved a Keystone pipeline deal today, that pipeline would take years to reach the Alberta tar sands fields - Alberta prefers they be called oil sands - although the crying need for carrying capacity in the Bakken raises the likelihood that approval will be forthcoming.
Producers told Bloomberg they expect to turn more to rail as a short-term solution to their current transport problems. Bloomberg says enough rail cars are being produced to hike capacity by 1 million barrels/day this year.
What does all this have to do with rail consolidation? While Burlington Northern can reach west coast refineries, its network does not extend east of St. Louis. Norfolk Southern (NSC) and CSX (CSX) do extend all the way east, and both are currently selling at below-market multiples of 11.5 times earnings.
The value of these two lines is being held down by the fact that their results are closely tied to the dwindling coal plays of West Virginia and Ohio, both of which have been shutting down due to competition from natural gas, much of it produced in the east.
Thus, they're cheap. A bid of $25 billion for CSX, for instance, would be eagerly accepted, even if much of the payment were in BRK.B shares (in order to give smaller shareholders a chance to cash out their holdings), and it would be likely to sail through the Justice Department, especially if it were accompanied by a bid by Union Pacific (UNP) for Norfolk Southern, giving Texas producers more options for their product. That would still leave U.S. shippers with competition in the market, in this case transcontinental competition.
Such a combination could also be good for eastern coal, which could still develop markets in China using cheaper rail transport and ships.
Increased rail shipments of oil, by the way, would also buoy the stocks of all eastern refiners, as well as Delta Air (DAL), which bought a refinery for making jet fuel last year.
While Berkshire originally bought Burlington Northern for coal shipments, oil looks like the way to wealth here.
Snippy said
8:42 PM, 01/18/13
"While Burlington Northern can reach west coast refineries, its network does not extend east of St. Louis"
Memphis is north of Moab.
CPRail does not have an oil field play.
Freddie Krueger said
9:59 PM, 01/19/13
What better way to create a pump and dump scenario than to create a rumor like this? There will be no consolidation.
The Krink said
10:37 AM, 01/21/13
I'm still trying to figure out why CP power is on these oil trains coming and going out the GPNW. Saturday when I was in a nearby community, an empty oil train lead by a pair of CP Dash-9's were heading south to Everett to go east. So where does this train eventually end up back in Canada. The oil trains can come from just about anywhere in the midwest and Canada to the several oil refineries in NW Washington. New traffic for sure.
Uke said
6:52 PM, 01/21/13
Krink you should know best when concerning power 'swaps,' and run-throughs like CP, or CN power heading up unit trains transiting our home territory. They CN, or CP have ready-built trains already powered up, and IF a 2LARRCO crew is available at New Westminster... Hop aboard and make the trip ta Balmer
We see 'em alla time heading up grainers, and/or mixed trains of lumber racks boxes, tankers, tri-levels...
Conversely both big Canuck outfits run BNSF's road power across The Great White North as well. Trains that originate in Vancouver may just be powered by 'home-road' units all the way inta Chicago.
Call it economy of scale. We have the power, they need it... Good for both countries. It's all about money.
The Krink said
10:28 AM, 01/23/13
CP power has never been a "consistent" on the BNSF Bham Sub. CN and BNSF have been swapping spit for a long time on the Bham Sub trains. CP not so much. I saw CP power run through on some potash trains down the Sumas Sub over the years. Saw an article about an oil train originating in Stoughton SASK on the CP to run to Port Westward OR to a BP refinery near Portland OR. That wasnt the train I saw as it was an empty going east out of Everett. Sure the puzzle will get figured out eventually.
ha...
-- Edited by FMB on Friday 18th of January 2013 02:23:08 PM
Those idiots at Bloomberg are spouting wishful thinking, and rumors. They wouldn't know the difference between Brent crude and Bakken, nor for Alberta 'tar'! That BN-SF-CN marriage was something that Krebs spouted after BNSF... Him and CN's CEO/Pres. Paul Tellier, at the time were hoping ta pull off... But smarter heads prevailed!
The whole thing was a 'get rich(er) quick(er) scam' that the ICC/STB put the kibosh on right quick! But I digress...
Canada has already granted access ta both CN, and CP ta ship crude (tar oil) east and west on its lines. The North Dakota crude (not Brent), Bakken oil can be shipped via BNSF ta Washington's 3 refineries, or ta Texas.
Seems ta me there's an overproduction problem, rather than the opposite. And somebody, perhaps Uncle Warren himself is behind the merger rumors.
f 2LARRCO is that concerned, why doesn't Buffet petition the energy dept. for a permit ta build a new refinery in North Dakota? There's yer ready solution. In fact BNSF already own a hell of a lot of property in ND. A state go-ahead, and Uncle Sam/Obama/EPA, and other regulatories would need ta sign off ta give a green light ta such a project, but it can be done. Bein' a big hurry won't cut it though!
We haven't seen a 'newly-built' refinery in over 30 years... All that can happen is refurbishing/updating old refineries...
http://en.wikipedia.org/wiki/Brent_Crude
-- Edited by Uke on Saturday 19th of January 2013 02:24:49 PM
http://seekingalpha.com/article/1115131-time-for-rail-consolidation?source=yahoo
Time For Rail Consolidation
The continuing oil boom in North Dakota and Texas has created a unique opportunity for railroad consolidation.
Berkshire Hathaway's (BRK.A) Burlington Northern would be the company doing the consolidating. They are the only major line that has access to the North Dakota Bakken fields, and they have a line running from Houston to Eagle Pass that can easily serve the Eagle Ford shale fields.
What Burlington lacks is direct access to eastern refineries that are now spending up to $110 per barrel, the Brent price, for their oil. West Texas prices of $95/barrel sound good, but they are sub-optimal for producers.
Even if the President approved a Keystone pipeline deal today, that pipeline would take years to reach the Alberta tar sands fields - Alberta prefers they be called oil sands - although the crying need for carrying capacity in the Bakken raises the likelihood that approval will be forthcoming.
Producers told Bloomberg they expect to turn more to rail as a short-term solution to their current transport problems. Bloomberg says enough rail cars are being produced to hike capacity by 1 million barrels/day this year.
What does all this have to do with rail consolidation? While Burlington Northern can reach west coast refineries, its network does not extend east of St. Louis. Norfolk Southern (NSC) and CSX (CSX) do extend all the way east, and both are currently selling at below-market multiples of 11.5 times earnings.
The value of these two lines is being held down by the fact that their results are closely tied to the dwindling coal plays of West Virginia and Ohio, both of which have been shutting down due to competition from natural gas, much of it produced in the east.
Thus, they're cheap. A bid of $25 billion for CSX, for instance, would be eagerly accepted, even if much of the payment were in BRK.B shares (in order to give smaller shareholders a chance to cash out their holdings), and it would be likely to sail through the Justice Department, especially if it were accompanied by a bid by Union Pacific (UNP) for Norfolk Southern, giving Texas producers more options for their product. That would still leave U.S. shippers with competition in the market, in this case transcontinental competition.
Such a combination could also be good for eastern coal, which could still develop markets in China using cheaper rail transport and ships.
Increased rail shipments of oil, by the way, would also buoy the stocks of all eastern refiners, as well as Delta Air (DAL), which bought a refinery for making jet fuel last year.
While Berkshire originally bought Burlington Northern for coal shipments, oil looks like the way to wealth here.
Memphis is north of Moab.
CPRail does not have an oil field play.
coming and going out the GPNW. Saturday when I was in a
nearby community, an empty oil train lead by a pair of CP
Dash-9's were heading south to Everett to go east. So where
does this train eventually end up back in Canada. The oil trains
can come from just about anywhere in the midwest and Canada
to the several oil refineries in NW Washington. New traffic for sure.
We see 'em alla time heading up grainers, and/or mixed trains of lumber racks boxes, tankers, tri-levels...
Conversely both big Canuck outfits run BNSF's road power across The Great White North as well. Trains that originate in Vancouver may just be powered by 'home-road' units all the way inta Chicago.
Call it economy of scale. We have the power, they need it... Good for both countries. It's all about money.
Sub. CN and BNSF have been swapping spit for a long time
on the Bham Sub trains. CP not so much. I saw CP power
run through on some potash trains down the Sumas Sub
over the years. Saw an article about an oil train originating
in Stoughton SASK on the CP to run to Port Westward OR
to a BP refinery near Portland OR. That wasnt the train I saw
as it was an empty going east out of Everett. Sure the puzzle
will get figured out eventually.