In 2012, U.S. railways hitched itself to shale's success

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A record-setting increase in domestic crude oil production was reflected on the nation's railways last year, with the amount of petroleum products on the railroads increasing by 46 percent in 2012.

More than 170,000 carloads of petroleum and petroleum products rode the rails, according to the Association of American Railroads. That's an increase of 46 percent from 2011's figures.

A report released Tuesday by the U.S. Energy Information Administration highlighted the shifting dynamics of commodities transported by rail, a leading barometer of where the nation is getting its energy.

Crude oil and petroleum product shipments increased on account of booming production in shale formations across Appalachia and the U.S. Last year set a record for U.S. crude oil production, with 780,000 barrels produced per day.

Crude oil and all petroleum products account for about 4 percent of all commodity carloads in 2012.

EIA analysts said oil production has been ramping up in areas like North Dakota, which doesn't yet have an established pipeline system that could transport the oil to major markets. Pipelines already transport about 90 percent of crude oil and petroleum in the United States.

While the year was good for oil production, shifting energy dynamics that have tempered coal demand left fewer coal carloads on the railroads.

About 726,000 carloads carried coal in 2012. That's down nearly 11 percent from 2011, a reflection of growing competition from cheap natural gas for use in electrical generation.

Despite the drop, coal remained the dominant commodity transported by rail, accounting for about 41 percent of all commodity carloads.

Coal was used for about 37 percent of the country's electricity generation in the first 11 months of 2012, according to the EIA, a drop of about five percentage points from the same period in 2011.

businessnews - marcellusshale

Erich Schwartzel: or 412-263-1455.


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