Evolution of Rail Related Energy Markets. The Energy Forum New York, NY March 18, 2013

Transcription

1 Evolution of Rail Related Energy Markets The Energy Forum New York, NY March 18, 2013

2 Assn. of American Railroads SLIDE 2

3 Integrated Rail Network U.S. freight rail network ~140,000 route-miles; ~40,000 in Canada & Mexico Every U.S. state but Hawaii ~ 1.5 million freight cars, ~ 31,000 locomotives in service in N. America Seamless across borders except for Customs SLIDE 3

4 Total: $68.1 billion Stone, gravel, sand - $2.1 bil. (3%) 1.83 billion tons originated Coal $14.7 bil. (22%) *Estimated. Some intermodal revenue is also included in individual commodities. Source: AAR (FCS) Gross Revenue in 2012 for Class I Railroads Intermodal* $14.6 bil. (22%) Other $6.0 bil. (9%) Lumber & paper $3.8 bil. (6%) Steel & other metal products $2.6 bil. (4%) Motor veh. & parts $4.9 bil. (7%) Food Chemicals $5.4 bil. (8%) $9.1 bil. (13%) Grain - $4.8 bil. (7%) SLIDE 4

5 Record Capital Spending Expected in 2013 U.S. Freight Railroad Capital Spending ($ billions) $11.6 $10.2 $9.9 $9.8 $9.2 $8.5 $5.9 $6.2 $6.4 $12.5 $ e 2013e Data are for Class I railroads. e estimate Source: AAR SLIDE 5

6 Have Been the Safest Years in History for RRs (Index 1980=100) Grade crossing collisions: 82% Train accidents: 80% Employee injuries: 85% '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12* *2012 is preliminary % = change from Source: FRA SLIDE 6

7 What s This? Source: EIA U.S. Crude Oil Production (millions of barrels per day) SLIDE 7

8 What s This? Shale containing oil or gas SLIDE 8

9 What s This? SLIDE 9

10 7.0 U.S. Crude Oil Production What s This? (millions of barrels per day) Source: EIA SLIDE 10

11 2,000 1,800 1,600 1,400 1,200 1, What s This? U.S. Crude Oil Production by State: (000 barrels per day; % = % change ) 79% 720% -22% -46% 37% 27% -22% 9% TX ND CA AK OK NM LA WY Federal offshore production (mainly in Gulf of Mexico) is not included. Source: EIA SLIDE 11

12 What s This? SLIDE 12

13 What s This? SLIDE 13

14 What s This? SLIDE 14

15 What s This? SLIDE 15

16 What s This? SLIDE 16

17 Railroads Help Keep Coal- Based Electricity BNSF CN CP CSX FXE KCS/KCSM NS UP Other RRs Freight Railroads in North America SLIDE 17

18 What s This? Hypothetical Transportation Costs Bakken to Gulf Coast (per barrel) Rail Pipeline Truck through Bakken $3 Load onto rail car $2 Rail direct cost $8 Trucking through Bakken $3 Tank car lease $3 Unload from truck to pipeline $2 Unload $2 Pipeline direct cost $7 Total $18 Total $12 The big unknown pipeline capital cost? Source: Morgan Stanley SLIDE 18

19 What s This? Pipelines and Railroads Have Different Characteristics Pipeline Rail Environmental concerns Permitting challenges Construction cost $$$ $ Long-term contract Operating economics $ $$$ Flexibility Relative relationships are approximations. Source: Morgan Stanley, AAR SLIDE 19

20 Originated Rail Carloads of Crude Petroleum on U.S. Class I Railroads: ,811 65,751 29,605 12,291 9,961 6,032 4,729 5,912 9,500 10, Source: AAR Freight Commodity Statistics SLIDE 20

21 2,860 2,498 2,832 2,650 3,395 6,784 8,583 10,843 11,324 11,389 16,789 26,247 36,544 51,492 64,663 81,122 Originated Rail Carloads of Crude Petroleum on U.S. Class I Railroads: Q Q Source: AAR Quarterly Commodity Statistics SLIDE 21

22 Crude Petroleum as % of Total Carloads Originated on Class I Railroads: % 0.22% 0.04% 0.03% 0.02% 0.01% 0.02% 0.03% 0.04% 0.10% Source: AAR Freight Commodity Statistics SLIDE 22

23 Railroads Help Keep Coal- Based Electricity Freight Railroads in North Dakota SLIDE 23

24 Carloads of Crude Petroleum What s Originated This? by Railroad: Q Q ,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 BNSF CSX GTC KCS NS SOO UP Source: AAR Freight Commodity Statistics SLIDE 24

25 What s This? SLIDE 25

26 Railroads Help Keep Coal- Based Electricity Freight Railroads in the Gulf Area BNSF CN CP CSX FXE KCS/KCSM NS SLIDE 26

27 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 What s This? Carloads of Crude Petroleum Terminated by Railroad: Q Q BNSF CSX GTC KCS NS SOO UP Source: AAR Freight Commodity Statistics SLIDE 27

28 What s This? Shale containing oil or gas SLIDE 28

29 Originated Rail Carloads What s of This? Crude Industrial Sand on U.S. Class I Railroads 244, , , , , , , Source: AAR Quarterly Commodity Statistics database SLIDE 29

30 What s This? Source: EIA U.S. Natural Gas Production (trillion cubic feet) SLIDE 30

31 Avg. Delivered Price of Natural Gas to Electric Power Plants $14 (dollars per million BTU) $12 $10 $8 $6 $4 $2 $0 SLIDE Source: Energy Information Administration

32 U.S. Electricity Generation: Natural Gas (million megawatthours) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Energy Information Administration SLIDE 32

33 U.S. Electricity Generation: Coal (million megawatthours) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Energy Information Administration SLIDE 33

34 Coal vs. Natural Gas as % of U.S. Electricity Generation 52% 48% 44% 40% 36% 32% 28% 24% 20% 16% 12% Coal Natural gas Source: Energy Information Administration SLIDE 34

35 U.S. Rail Carloads of Coal 160, , ,000 (average weekly originations) 2008 (peak year) 130, , , ,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Excludes U.S. operations of Canadian railroads. Source: AAR SLIDE 35

36 U.S. Rail Carloads of Coal 160, , , , , , ,000 (average weekly originations) 2008 (peak year) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Excludes U.S. operations of Canadian railroads. Source: AAR SLIDE 36

37 What s This? Crude petroleum (+168,060, %) Food (+52,878, +3.3%) Nonmetallic minerals (+38,184, +3.0%) Petr. prod. & coal products (+32,830, +5.7%) Coal (-675,300, -9.6%) Stone, clay, glass products (+21,540, +4.9%) Class I Carloads: 2012 vs Pulp & paper (+16,013, +2.4%) Lumber and wood (+19,390, +6.0%) Transportation equip. +5,701, +0.4%) Chemicals (-15,129, -0.7%) Waste & scrap (-18,170, -2.8%) Farm products (-145,946, -8.5%) Primary metal products (+19,219, +3.3%) Metallic ores (-10,728, -1.2%) Source: AAR Freight Commodity Statistics SLIDE 37

38 What Could Mess Things Up? Limits on fracking Economy tanks Price changes Regulatory change Environmental issues SLIDE 38

39 Assn. of American Railroads SLIDE 39