HOUSTON -- The development of liquefied natural gas (LNG)
fuels could bolster North America's crude-by-rail industry by
significantly cutting prices, the CEO of BNSF Railway said late
Speaking at the IHS CERAWeek conference in Houston,
BNSFs Matt Rose said his company is currently testing the
use of locomotives running on LNG, which could dramatically
Moreover, Rose described himself as cautiously
optimistic that they could prove viable in the near
Rose delivered his comments at a plenary session on the
North American energy abundance. While other panelists,
including Enbridge CEO Al Monaco, touted the need for pipeline
system expansions, Rose countered that rail
offers a reliable, safe and flexible alternative to
One advantage to rail is the extensive network, he noted.
For example, most pipeline networks currently lack the ability
to transport crude oil to Northeast US refineries.
On the other hand, rail still faces challenges in the form
of permitting and Environmental Protection Agency
(EPA) regulations, Rose added.
Nonetheless, Rose is quite bullish on the crude-by-rail
outlook. In an interview with The Wall Street Journal,
he predicted that by the end of 2013, crude shipments on US
railroads could reach 700,000 bpd, up 40% from current
In another 18 months, Rose said that figure could rise
another 43% to 1 million bpd.
Morgan Stanley recently compared the cost of shipping crude
by rail and pipeline from North Dakota to the Gulf Coast,
concluding that rail costs -- about $18/bbl -- were higher than
pipeline costs of $12/bbl.
But Rose contends that while operational costs are higher,
railroads can move more expeditiously than pipelines to
establish new shipping options. This is critical for
rapidly-growing fields such North Dakotas Bakken and the
Eagle Ford in South Texas.
Additionally, if LNG fuels soon become a reality, the
margin gap between rail and pipeline could shrink.
CERAWeek continues through Friday at the Hilton Americas in
-- Additional reporting by Russell Gold via
Dow Jones Newswires