California Crude-by-Rail Plummets Amid Oil Price Collapse

  • Refiners turn to waterborne shipments, better pipeline system
  • U.S. also transporting less crude by rail than in 2014

Shipments of crude oil by railroad into California plummeted by 69 percent in 2015 amid the price collapse in oil and the shrinking difference in international and U.S. prices.

California imports of crude-by-rail averaged 4,800 barrels a day in 2015, down from 15,700 in 2014, according to data released Thursday by the state’s Energy Commission. Almost all the state’s crude by train comes from New Mexico, Utah and Wyoming.

“The economics of crude-by-rail are very poor right now,” Ian Goodman, president of The Goodman Group Ltd., a Berkeley, California-based energy consultancy, said in a phone interview. The difference between international and U.S. prices has narrowed, he said, and refineries are taking deliveries by water and by an improved pipeline system rather than using more expensive trains.

Using rail made sense for refiners when U.S.-produced oil was significantly cheaper than imported, then a spate of deadly accidents in 2014 prompted federal regulations. Now crude-by-rail may be “diminishing into history” because of safety concern and economics, Cynthia Quarterman, a former administrator of the U.S. Pipeline and Hazardous Materials Safety Administration, said at the Argus Americas Crude Summit in Houston on Jan. 21.

California imported about 950 barrels of oil a day by train in December, down from 15,800 a year earlier. Imports from Wyoming declined 92 percent to 493 barrels a day in the same period. Officials from the California Energy Commission didn’t immediately respond to a request for comment.

U.S. crude-by-rail shipments have also slipped, to 768,000 barrels a day in October from 928,000 a year earlier, the most recent month for available data, according to the Energy Information Administration. The agency on Friday is scheduled to release its crude-by-rail data for November.

(An earlier version of this story corrected a quote in the third paragraph.)

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