With above- and below-ground storage tanks running out of room and space growing scarce in tankers, oil traders are looking to park their crude in railcars.
Thousands of the cars were ordered when producers needed a way to move the oil from shale formations where no pipelines connected, according to a story in The Wall Street Journal. Companies spent tens of millions of dollars on facilities to handle crude-by-rail shipments. But low prices stranded many of those cars because producers can’t afford the cost of shipping crude by rail.
Oil traders are experimenting with the idea now, although it requires an appetite for risk. Rail storage faces some limitations, including safety and liability issues like the risk of collisions and fire, as well as the cost of track space. Oil trains have been involved in “a string of high-profile” accidents, the Journal says.