"Opportunities in Tank Barges Related to Crude Oil Production and Movement"

Informa Economics, Inc., is pleased to announce an important new industry study on how changes in petroleum production in Canada, the Bakken Region and natural gas in major shale gas regions, such as the Marcellus region will impact the US inland navigation system. Driving such an interest is the wide arbitrage spread between the Cushing, Oklahoma crude and the Brent futures crude prices associated with surplus supplies of petroleum crude in Cushing. This spread and other discontinuities in the market are creating opportunities for river movements of crude oil.

Introduction

Over the last 20 years, new technology has emerged tapping natural gas and crude oil that was previously inaccessible because it was trapped in shale, which has low permeability or is “tight.” The primary new technologies include hydraulic fracturing and horizontal drilling. The use of such technologies was expensive to employ and uneconomical until the price of crude oil turned higher. At the end of 2001, crude oil was priced under $20 per barrel, and then ran up to more than $140 per barrel. Currently the price is $85 to $95 per barrel, which could be the new midpoint price as shown in Figure 1. From peak of the market in September 2008 until October 2011, US crude oil production has increased from 3.9 million barrels per day to 5.8 million or an increase of 49%, which is now creating transportation opportunities. These higher price levels have also triggered an expansion in shale extraction production as shown in Figure 2.

The impact of the increased energy production is only beginning to be truly felt by the transportation market. Cushing, Oklahoma has been in the news with its surplus supply of crude oil, but it is the tip of the iceberg. Barge locking information queried from the Army Corps Lock Performance data indicated a dramatic increase in crude petroleum barge loadings. All indications point to the increases in crude oil production from the natural gas and oil site extraction continuing in areas tributary to the river system, and an important question has emerged such as "what adjustments will be required by the inland barge industry in the short and long term to handle this extra volume?"

Study Table of Contents

The entire prospectus and enrollment in pdf form

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