There is now some convincing evidence of a domestic crude oil barge boom.
The U.S. Energy Information Administration (EIA) recently released its monthly waterborne volumes of domestic crude oil shipments from Midwest and Canadian oilfields to the Gulf Coast.
The baseline year volume, at the beginning of 2010, is zero. The EIA statistics show steady growth from mid-2010 to almost 2 million bbls. a month by the end of 2012. Volume more than doubled to nearly 5 million bbls. a month by the end of 2013.
A monthly volume of 5 million bbls. would require about 170 30,000-bbl.-capacity barges. This is about equal to 85 unit oil trains.
The EIA numbers suggest that rail is still the dominant mode for the transport of landlocked crude oil out of the northern Midwest (North Dakota) and Canada to domestic refineries. Moreover, analysis of the rail markets served, particularly the East Coast, suggests that the transport of domestic crude by rail is not a temporary phenomenon. For example, East Coast refineries report a reduction in crude oil imports because of increased domestic crude shipments by rail.
There is an emerging southbound market for domestic barge movements of crude oil to the Gulf Coast. Barge operators now appear to be willing to commit new barges for increased shipments of domestic crude oil in the Mississippi River corridor. If barges are used for crude oil transport to destinations that are also served by rail, barges will be very competitive based on freight cost.
That’s why the barge market for domestic crude oil is expected to continue to grow. These domestic crude oil rail and barge markets were almost nonexistent in early 2010.
Domestic crude oil has been a game changer for the U.S., beginning with the sharp increase in offshore Gulf of Mexico production after 2000 and now with the increase in domestic crude from the upper Midwest after 2010.
Forecasts for new, dynamic markets are difficult and often short lived. However, I expect to see the continued growth of domestic crude oil shipments for both rail and barge.