Oilfield beckoning tank truck industry

Oct. 1, 2011
ON A DRIZZLY September morning a constant parade of vacuum transports and other tanker rigs pass by on US Highway 84 on the Texas side of Toledo Bend

ON A DRIZZLY September morning a constant parade of vacuum transports and other tanker rigs pass by on US Highway 84 on the Texas side of Toledo Bend Reservoir. The derrick of a newly installed drilling rig pokes up from behind a strip shopping center in the small Texas town of Joaquin. On the other side of the reservoir is the formerly sleepy town of Logansport, Louisiana.

These communities and this region are right in the heart of the Haynesville Oil Shale play, and it is one place where the US economy is growing by leaps and bounds. This picture of economic vibrancy is being repeated at oil and gas shale areas across the United States and Canada, and it is one of the most under-reported stories in the media today.

In addition to the Haynesville formation, some of the other booming oil and gas shale plays include the Marcellus (US northeast), Antrim (Michigan, Indiana, and Ohio), Fayetteville (Arkansas), Barnett (Texas), Eagle Ford (Texas), Woodford (Oklahoma), Bakken (North Dakota), Green River (Colorado, Utah, and Wyoming), and Uinta (Utah and Colorado).

Development of these formations has given the United States access to tremendous quantities of oil and natural gas through the use of technology improvements that include horizontal drilling and hydraulic fracturing. This new drilling strategy has been described as a “full scale sea change” in the way unconventional oil and gas sources are developed.

Beyond the technological nuances, what this really means are new domestic supplies of oil and natural gas that reduce our dependence on imported petroleum supplies. Oil imports already dropped by 8% in 2010 due to increased domestic production, according to the US Energy Information Administration. Natural gas imports are projected to fall by more than 4% annually this year and next year.

The amount of new natural gas and oil trapped in these shale formations is staggering. For instance, it is estimated that the Barnett Shale formation in Texas contains enough natural gas to fuel every one of the state's gas-fired electric generating plants for the next 300 years.

Just as importantly, the new drilling approaches are creating jobs and demand for a tremendous range of equipment needed to support the surging oil and gas production. In fact, the oil and gas shale opportunities will do more to create jobs and build the economy than any of the failed economic stimulus programs touted by the Obama Administration — and without any federal funding.

On the jobs side, the American Petroleum Institute has estimated that the increased oilfield activity could create 1.4 million new jobs over the next few years. The American Chemistry Council estimates that a 25% increase in domestic natural gas will boost chemical sector employment by at least 400,000.

Abundant, lower-cost shale natural gas already has encouraged some chemical companies to increase production of plastics and other products. Dow Chemical reportedly announced plans to build three new manufacturing facilities and restart another idled during the recession. Eastman Chemical restarted a plant that had been shuttered in recent years. Executives from Bayer are in talks with companies interested in building two ethane crackers at its two industrial parks in West Virginia.

All of this should be good news for tank truck fleets because it means more loads. Going beyond the typical liquid and dry bulk cargoes, the oilfield has its own very specific cargoes. These include industrial materials, like sand and clay, as well as a variety of specialized drilling and fracking chemicals.

Oilfield hauling isn't for the faint-hearted, though. It's hard work for drivers and vehicles and calls for a total commitment from any company that gets into the business.

Transloading activity is growing in many of the oil and gas shale areas that are beyond the reach of the existing pipeline structure. Over the past year, Bulk Transporter has published a number of announcements on new transload facilities in the oil patch.

Among these is a new crude oil transloading facility that Atlas Oil Company opened in Odessa, Texas, with initial capacity to handle 30,000 barrels a month. Savage Companies is building a multi-user rail terminal in Trenton, North Dakota, to handle crude oil, frac sand, and other oilfield materials.

Bulk Transporter will look at the emerging oilfield transload opportunities in our December Intermodal Issue. In January 2012, we'll examine the oil and gas shale sector outlook for the year ahead and what that means for tank truck industry. We'll review the best equipment specs for hauling and working in the oilfield.

In the months that follow, we'll be writing a lot more about oil and gas shale developments and what they mean for our readers. We will try to stay on top of the relevant news and developments, and we encourage our readers to contact us with story tips and suggestions.

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