While oil companies want to continue to deliver the resource to refineries throughout the United States, government regulators are calling for more stringent safety regulations.
If recent proposals are implemented, procurement services may have to help energy businesses reorganize distribution routes to help flow remain consistent. Despite the fact that it's the middle of the summer, organizations are thinking ahead in anticipation of the upcoming winter. Two seasons ago, U.S. power prices rose as transporters struggled to satisfy demand.
Replacing old equipment
Employing strategic sourcing professionals to recycle old assets and purchase new property is likely to become a common practice. According to The Wall Street Journal, U.S. legislators recently presented a rule that would force transportation enterprises to rotate out tens of thousands of DOT-111 tank cars with upgraded models over the next two years.
The proposed measure is a year shorter than Canada's identical law. The two pieces of legislature apply to containers that carry ethanol, oil and other hazardous liquids. In addition to this mandate, discussions regarding a 40 mph speed limit would be enforced until existing railcars can be updated.
The two rules were developed in light of an accident that occurred in Lac-Mégantic, Quebec, in which 47 people were killed as a result of a derailed train carrying Bakken crude oil from North Dakota.
Switching up tactics
Marketing analysis reports have shown that transporting oil by pipeline is cheaper and safer than delivering the substance by rail. With this in consideration, it's important to regard the costs associated with constructing a feasible, continental pipeline network - some of which are politically motivated:
- Procuring the property and land necessary to construct the pipelines
- The materials required to build the infrastructure
- The skilled labor needed to oversee the operation's completion
It turns out companies are already making the transition. According to NGI's Shale Daily, crude oil rail transportation from North Dakota decreased 59 percent in May. North Dakota Pipeline Authority Director Justin Kringstad stated in a webinar that pipeline traffic increased 41 percent during the same month.
Energy Transfer Partners LP, a company based out of Dallas, proposed the construction of a 30-inch diameter, 1,100-mile pipeline that would transport light sweet crude oil from Bakken to the Gulf Coast. Kringstad noted that the endeavor is still being developed, but remained optimistic about the project.
Drafting and putting the initiative into action may require the logistical expertise of a strategic sourcing company - one capable of predicting the anticipated output of and demand for Bakken oil.