Iran deal unlikely to impact oil trains through Albany

Times Union | July 14, 2015 | Column by Eric Anderson

East Coast refineries use light crude not a heavier grade from overseas

Oil train cars seen from the Route 155 bridge on Thursday April 30, 2015 in Watervliet, N.Y. (Michael P. Farrell/Times Union)

The deal reached Tuesday to cap Iran's nuclear program and end economic sanctions is expected to unleash a flood of crude onto an already saturated market.

Iran has the world's fourth largest known reserves of oil, according to the U.S. Energy Information Administration, and the lifting of sanctions would allow it to upgrade oil field technology and improve production.

And it does have plenty of crude already pumped, in storage or on tankers, ready for market.

But experts say it's not likely to immediately affect domestic output at North Dakota's Bakken oil field and the flow of oil to the Port of Albany.

First, Congress needs to approve the lifting of sanctions.

"The sanctions are still on Iran for the immediate future, until Congress can look at the deal and approve it," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com.

"The main oil flowing through your area is light sweet crude," said John Felmy, chief economist for the American Petroleum Institute. That's the grade of oil that refineries up and down the East Coast use.

"The East Coast refineries made a decision 20 years ago not to switch to heavier sulfur" oil of the type that might come from overseas. Iran's oil is generally heavier and more sour, with greater sulfur content, than the light sweet crude from the Bakken field.

Bakken producers also have gotten far more efficient at hydrofracking and pumping from the Bakken shale formation.

"Producers will keep pumping as long as their price exceeds the average variable cost" of pumping.

With the oil glut, there's likely to be a push to lift a ban on exporting U.S. crude that dates from the 1970s. That could even boost demand for Bakken crude, which could be exported from the Port of Albany.

Still, with Iran eager to raise cash, its oil is likely to make its way to market as soon as sanctions are lifted.

The International Energy Agency expects this to eventually hit Bakken producers.

"While (light, tight oil) output may be more price sensitive than conventional crude supply, it cannot stop on a dime: lags remain," the IEA wrote in a report last week. "Barring a major supply disruption elsewhere, it may also take another price drop for the full supply response to unfold."

Fewer oil rigs are operating in the Bakken field, according to figures from the North Dakota Oil and Gas Division of the Department of Mineral Resources. Just 73 were active statewide Tuesday, down from 193 a year ago.

Yet oil production has remained relatively stable.

And while the staging yard that the Canadian Pacific Railway built in Colonie to handle oil train traffic was empty Tuesday afternoon, the flow of oil by rail into the Port of Albany is likely to continue, at least for the near future.

"At this point," said Felmy of the API, "it's really too soon to know what's going to happen."

eanderson@timesunion.com • 518-454-5323

http://www.timesunion.com/tuplus-business/article/Iran-deal-unlikely-to-impact-oil-trains-through-6385126.php

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commented 2015-07-15 10:31:29 -0400 · Flag
As Anderson concludes, we’ve still got a huge number of these trains. They put us at short term risk and contribute to the long term trajectory of catastrophic climate change for every living thing on the planet. If you’re willing to scare yourself to death read this article by Stephen Leahy:
A Hard Deadline: We Must Stop Building New Carbon Infrastructure by 2018 https://www.skepticalscience.com/must-stop-new-carbon-infrastructure-2018.html
PAUSE, People of Albany United for Safe Energy posted about Iran deal unlikely to impact oil trains through Albany on PAUSE, People of Albany United for Safe Energy's Facebook page 2015-07-15 09:55:49 -0400
Iran deal unlikely to impact oil trains through Albany
@PAUSEnergy tweeted this page. 2015-07-15 09:55:45 -0400
PAUSE, People of Albany United for Safe Energy
PAUSE is a grassroots group of individuals who have come together to promote safe, sustainable energy and fight for environmental justice. We engage the greater public to stop the fossil fuel industry’s assault on the people of Albany and our environment.