Beginning in 2013 and continuing into 2014, the strong crude oil and natural gas condensate industry has driven a corresponding increase in orders for tank barges. In 2013 WorkBoat Watch wrote that the 2012 inland tank barge market increased 60 percent over 2011 and expected 2013 to outpace the 2012 numbers. Producers are using waterborne transport to bypass pipeline congestion, just as they used rail for the same reason.
Yahoo Finance reported earlier this year that the Kirby Corporation ordered 66 inland tank barges with a total capacity of 1,220,000 barrels for delivery in 2014. In 2013 Kirby added 22 tank barges. Kirby is the nation's largest domestic tank barge operator, operating in three major areas: throughout the Mississippi River System, in the Gulf Intracoastal Waterway, and along all US coasts as well as in Alaska and Hawaii. American Commercial Lines is also adding tank barges, investing $69 million for 35 new barges in 2012 and another $38 million in 2013.
Reuters reports that transport by barge has outpaced transport by train for the first time this year. For example, shipments of Bakken crude oil from North Dakota to California sent 940,500 barrels via barge vs 702,135 barrels on railcars. In 2013, rail shipments barely edged out barge transport (1.35 million barrels vs 1.33 million barrels). In 2012, almost no crude oil was transported by barge.
One reason this change has taken place is that environmental groups have resisted construction of additional rail terminals to handle the shipments. It is also accepted that transporting crude oil by rail is more dangerous than by barge on waterways – the 2013 derailment and explosion in Lac Megantic, Quebec killed 47 people. The lack of existing major pipelines from the Midwest has also contributed to the reliance on marine barges.
Although a pipeline would be a more efficient and less costly method to transport oil to refineries, permitting along the route could take many years. Barges easily plug into existing port infrastructure and, therefore, can be put to use immediately. They, also, do not require the extensive rail terminal infrastructure needed to offload their cargo at each refinery; most refineries have waterborne access already in place to receive imported oil. Individual barges can carry more crude than a rail tank car. Two 30,000 barrel barges hold as much as one 100 car train.
Economies of scale and flexibility, therefore, has driven the barge building boom we are seeing today. Shippers will use barges to move crude oil on inland and coastal routes in addition to handling the oil as the final leg of a rail-transport-to-refinery operation.
PortVision serves both marine terminals and barge operators with boat tracking, dock management, and fleet management systems. To learn how PortVision can help you optimize your crude supply chain, contact us today.