March 16, 2016: Using Tank Cars To Store Crude Oil

As a result of the oil prices crashing last year less crude oil is being moved by rail which is leading to more crude oil being stored in tank cars as some companies are waiting for the price to recover. Railway Supply Institute shows rail car manufacturers delivered 36,065 new tank cars last year but according to AAR the number of carloads of crude oil fell by 16.8%. While there isn’t an agency that currently keeps data on rolling storage of crude oil the practice does not appear to be widespread at this time. Many owners of rail sidings simply do not want the liability of storing hazardous materials. Many major railroads will only move cars containing hazardous materials but will not store them. Storing crude oil in a rail car can cost up to $5 per barrel every month. One tank car can typically hold 700 barrels. Ernie Barsamian, a principal of The Tank Tiger stated “It’s really more of an opportunistic play if you’re sitting on a bunch of rail cars. If you are looking to lease the cars or have to lease the track, it’s not as attractive”.
According to federal regulations tank cars loaded with crude oil can only be stored on private tracks and the owner of that track must have security plans that will prevent unauthorized access to the contents.
Matthew Lehner, an FRA spokesman, stated “FRA is closely monitoring the transportation of crude oil and other energy products, and if we find that additional steps are necessary to address safety concerns, we will take them”.

Using Tank Cars To Store Crude Oil