CDZ Dakota Pipeline Not a Big Deal?

[Toronado3800]

Hello,

Another thread reminded me of something I read awhile back.

So I guess lets start with basics. Is this website real? Dakota Access Pipeline Facts

Assuming it is, is moving ~6 trains worth of oil a day to a pipeline a big deal?

 

[william the wie]

Very much so, it lowers the breakeven point needed to bring new fields online

 

[Picaro]

Looking up the price per brl by rail versus by pipeline and it does little or nothing; it puts a few more pennies in the pipeline company's pocket, the shareholders get richer. They don't have to do anything but match the railroad price, their only competitor, so even if it lowered the pipeline company's costs down to a nickel a brl they're going to charge what they charge now to the customers. Why wouldn't they?

The Keystone Extension all the noise was made about only cut a few miles off the total trip of the system by making a triangle across a square corner; that stuff had already been flowing to the Gulf all along over the system already in place. You can calculate it yourself by using simple trigonometry. when the price of the sludge drops low enough and it's no longer economical to mine and ship, the pipeline company files for bankruptcy, abandons the pipeline, and the tax payers get left to pay for cleaning it up after them, like always.

 

[Toronado3800]

According to the math I have done, this pipeline, 3.6 billion to build, was for a $7ish per barrel break per barrel vs using a train.

The most dramatic way I can put that is if the break even point on pumping wherever it comes from was $65 a barrel it is now $58. Not insignificant to the companies pumping I suppose or the guys getting laid off when oil hits $63 a barrel (or whatever).

Pipelines in seem a little bit safer to transport on than trains. Not sure I buy all the statistics. Railcars pass a lot of eyes, pipelines leak wherever until someone mentions it to the pipeline company.

Will this pipeline affect those of us not working for the railroad or in the oil fields...I dunno. Assuming it pumps 470,000 barrels a day and we use 19,630,000,000 barrels a day as a country it moves .0239% of our oil. Not a big percentage I guess. The savings though, $7 x 470,000 barrels is $3,290,000 per year. Not chump change.

But it cost $3,800,000,000 to build supposedly so it won't pay for itself for 1,155 years? (Did I really do the math correctly?)

Now if it increases xyz company's ability to ship oil by 470,000 barrels a day because the rail option is still there and there is now a pipeline also maybe it can cut that 1,155 years down some? Assuming $18 per barrel profit for the oil company that can be $8,460,000 of missed oil pumping profit in a year.

$8,460,000+$3,290,000= $11,750,000 a year of increased profit. Still takes a while to get to $3.8 billion, 323.4 years. That's a number people in the new world can relate to at least.

What am I missing number wise here? I messed something up I bet. There is no way this thing was built to pay for itself in 323 years. Tax deductions maybe?

 

[Picaro]

What you're missing is that it isn't going to lower costs nearly as much as is claimed, certainly not by $7 a brl. just for that little leg, nor is the costs savings going to be passed on to consumers anyway; they only have to be a little bit cheaper than the rail charges per brl., no matter how much cheaper the costs are in any case. Put the rail competition out of business and they charge a lot more, whatever the market will bear. The finds in West Texas alone will make the costs of the Canadian stuff too expensive and probably cut back on the production there by more than enough to make the line obsolete anyway, at any cost. As I said, it's only a short term benefit for the pipeline owners and nobody else.

Short term increases in cash flow aren't 'profits' to the company, and they aren't going to retain much in the way of earnings, it's almost all going to go to paying larger dividends to individual stockholders. the execs and shareholders could care less if it's ever paid off at all.. The 19th century railroad barons used the same tactics to build up personal wealth and saddling the corporations with huge mountains of debt; they were never going to have to pay for that debt themselves, thanks to 'limited liability' schemes and the 'corporate person-hood' legal fictions.

 

[william the wie]

According to the math I have done, this pipeline, 3.6 billion to build, was for a $7ish per barrel break per barrel vs using a train.

The most dramatic way I can put that is if the break even point on pumping wherever it comes from was $65 a barrel it is now $58. Not insignificant to the companies pumping I suppose or the guys getting laid off when oil hits $63 a barrel (or whatever).

Pipelines in seem a little bit safer to transport on than trains. Not sure I buy all the statistics. Railcars pass a lot of eyes, pipelines leak wherever until someone mentions it to the pipeline company.

Will this pipeline affect those of us not working for the railroad or in the oil fields...I dunno. Assuming it pumps 470,000 barrels a day and we use 19,630,000,000 barrels a day as a country it moves .0239% of our oil. Not a big percentage I guess. The savings though, $7 x 470,000 barrels is $3,290,000 per year. Not chump change.

But it cost $3,800,000,000 to build supposedly so it won't pay for itself for 1,155 years? (Did I really do the math correctly?)

Now if it increases xyz company's ability to ship oil by 470,000 barrels a day because the rail option is still there and there is now a pipeline also maybe it can cut that 1,155 years down some? Assuming $18 per barrel profit for the oil company that can be $8,460,000 of missed oil pumping profit in a year.

$8,460,000+$3,290,000= $11,750,000 a year of increased profit. Still takes a while to get to $3.8 billion, 323.4 years. That's a number people in the new world can relate to at least.

What am I missing number wise here? I messed something up I bet. There is no way this thing was built to pay for itself in 323 years. Tax deductions maybe?

You can't ship Canadian oil in Canada.

 

[usmbguest5318]

is moving ~6 trains worth of oil a day to a pipeline a big deal?

I am sure it is to the people paying for and being paid for the oil and its transport.

 

[william the wie]

is moving ~6 trains worth of oil a day to a pipeline a big deal?

I am sure it is to the people paying for and being paid for the oil and its transport.

Also the peace of mind that the oil is not on a train creating far greater risks is a bigger consideration.

 

[Picaro]

is moving ~6 trains worth of oil a day to a pipeline a big deal?

I am sure it is to the people paying for and being paid for the oil and its transport.

Also the peace of mind that the oil is not on a train creating far greater risks is a bigger consideration.

Pipelines are the bigger risk; train cars carry small amounts; a pipeline break will dump far more on the ground than a train wreck will. Pipelines also explode, many times spectacularly so. They also run through residential areas and right the middle of cities.

 

[william the wie]

is moving ~6 trains worth of oil a day to a pipeline a big deal?

I am sure it is to the people paying for and being paid for the oil and its transport.

Also the peace of mind that the oil is not on a train creating far greater risks is a bigger consideration.

Pipelines are the bigger risk; train cars carry small amounts; a pipeline break will dump far more on the ground than a train wreck will. Pipelines also explode, many times spectacularly so. They also run through residential areas and right the middle of cities.

That would be the natural gas pipelines that explode but crude explosions are a result of train wrecks more often than not.

 

[Toronado3800]

Apparently a train can carry 1/6th the oil this 3.8 billion dollar pipeline can carry in a day.

Train derailments almost never spill EVERYTHING the train is carrying. Even in a large disaster like Eunice fifteen or so years back. Oil isn't even the scariest thing moving on trains so while the possibility exists of a disaster at every crossing....

Pipelines seem to have the bigger chance of a catastrophic disaster. Railroads to have the higher chance of a spill.

Pipelines, once you take construction out of the equation, are cheaper to move this oil on.....construction costs though make it a pretty long term investment. There is something I am missing with tax breaks or the ability to increase capacity though.

 

[Markle]

Pipelines are the bigger risk; train cars carry small amounts;

100% FALSE

 

[Markle]

Bottom line, the worst case scenario for a pipeline is far greater than by rail. The chances of incidents with rail are far greater than with pipelines.

The cost to transport oil by pipeline is about $5.00 per barrel and $10-$15 per barrel by rail.

A pipeline is far superior for long distance transportation whereby rail and truck superior for short distances.

We have millions of miles of pipelines all across the US, through mountains, under lakes and rivers.

They're being built, they're safe, economical and a great think for America.

 

[Toronado3800]

Bottom line, the worst case scenario for a pipeline is far greater than by rail. The chances of incidents with rail are far greater than with pipelines.

The cost to transport oil by pipeline is about $5.00 per barrel and $10-$15 per barrel by rail.

A pipeline is far superior for long distance transportation whereby rail and truck superior for short distances.

We have millions of miles of pipelines all across the US, through mountains, under lakes and rivers.

They're being built, they're safe, economical and a great think for America.

According to the math I have done, this pipeline, 3.6 billion to build, was for a $7ish per barrel break per barrel vs using a train.

The most dramatic way I can put that is if the break even point on pumping wherever it comes from was $65 a barrel it is now $58. Not insignificant to the companies pumping I suppose or the guys getting laid off when oil hits $63 a barrel (or whatever).

Pipelines in seem a little bit safer to transport on than trains. Not sure I buy all the statistics. Railcars pass a lot of eyes, pipelines leak wherever until someone mentions it to the pipeline company.

Will this pipeline affect those of us not working for the railroad or in the oil fields...I dunno. Assuming it pumps 470,000 barrels a day and we use 19,630,000,000 barrels a day as a country it moves .0239% of our oil. Not a big percentage I guess. The savings though, $7 x 470,000 barrels is $3,290,000 per year. Not chump change.

But it cost $3,800,000,000 to build supposedly so it won't pay for itself for 1,155 years? (Did I really do the math correctly?)

Now if it increases xyz company's ability to ship oil by 470,000 barrels a day because the rail option is still there and there is now a pipeline also maybe it can cut that 1,155 years down some? Assuming $18 per barrel profit for the oil company that can be $8,460,000 of missed oil pumping profit in a year.

$8,460,000+$3,290,000= $11,750,000 a year of increased profit. Still takes a while to get to $3.8 billion, 323.4 years. That's a number people in the new world can relate to at least.

What am I missing number wise here? I messed something up I bet. There is no way this thing was built to pay for itself in 323 years. Tax deductions maybe?

There is something my formulas above are missing, where the economic sense of building the pipeline is. I have done something wrong or am skipping something (tax breaks?).

Otherwise the pipeline construction makes sense in 300+ years to shareholders....I have skipped something.

 

[Picaro]

Pipelines are the bigger risk; train cars carry small amounts;

100% FALSE

100% true. Pipelines dump a lot more oil in even a small spill. Rail spills are small and limited to the area of the track itself. The sludge from Canada is a lot more toxic than regular petroleum to boot and a much larger health and environmental threat, and it's extremely corrosive.

And, it doesn't reduce the costs to '$5 a bl'; the costs from Dakota to the Gulf ports is around $12/bl; the cost by rail from Dakota to New York is $13/bl for a comparable distance. Rail also provides more long term jobs.

 

[Picaro]

is moving ~6 trains worth of oil a day to a pipeline a big deal?

I am sure it is to the people paying for and being paid for the oil and its transport.

Also the peace of mind that the oil is not on a train creating far greater risks is a bigger consideration.

Pipelines are the bigger risk; train cars carry small amounts; a pipeline break will dump far more on the ground than a train wreck will. Pipelines also explode, many times spectacularly so. They also run through residential areas and right the middle of cities.

That would be the natural gas pipelines that explode but crude explosions are a result of train wrecks more often than not.

Crude explodes as well; it outgasses not only natural gas but several kinds of combustible methanes and other fumes. Pipeline leaks can go for days without being detected.