Until fairly recently, transporting crude oil and bitumen via oil pipelines had been an effective means of delivery. However, in Canada, more oil exploration companies are seeing increased production. As demand for fossil fuels grows throughout North America, the use of rail cars to transport these products throughout the continent is seeing significant growth.
At the forefront of this crude-oil-by-rail movement is Torq Transloading. Established roughly three years ago, this company has grown from moving 600 barrels per day to its current rate of 40,000 barrels per day. The company ships 30 percent of Canada’s oil and is poised for even further growth.
“The market [for crude-by-rail delivery] has grown exponentially,” says Jarrett Zielinski, Torq’s president and CEO. “We’re able to send crude oil from its origin to markets not typically served by the pipelines.”
The company is an affiliate of Goulet Trucking Ltd., Shaunavon, Saskatchewan, an oilfield hauling company that has been doing business in the region for more than 50 years. Torq has established strong ties with its clients, which include producers, refiners and marketers, as well as end-users to help connect suppliers with consumers.
Torq Transloading’s system saves its clients transportation and processing costs through various efficiencies. “In Canada, we’re one of the largest shippers of crude oil by rail and one of the early movers in this industry,” Zielinski boasts.
In Canada, much of the crude oil is very heavy and highly viscous in nature. When sent through a pipeline for delivery, the crude must be diluted with condensate to help it flow more freely. When the oil reaches its destination, this condensate must be removed from the oil, which adds cost.
“It’s very expensive to remove the condensate,” Zielinski claims. “In addition, the oil-to-condensate mixture is typically about two-thirds crude to one-third condensate.” Because this condensate is used solely to reduce the crude’s viscosity, there isn’t any inherent value in the condensate itself. If the shipping cost per barrel is roughly $10, then 20 to 30 percent of this fee is wasted on the condensate, he says. He adds that the shipper never redeems the value of that product.
In contrast, shipping by rail car eliminates the need for condensate altogether. Most of the cars that Torq fills are insulated rail cars that are equipped with coil systems that are used to heat the crude. When the product arrives at its destination to be off-loaded onto trucks, the coil system is hooked up to a steam hose that heats the coils which, in turn, heats the oil. When the oil is heated to the point at which it can flow easily, it’s off-loaded onto trucks. The company offers both truck-to-rail and rail-to-truck transfer at its six transloading sites. These include the Whitecourt and Tilly sites in Alberta, and Lloydminster, Unity, Instow and Bromhead sites in Saskatchewan.
“Not only are we able to maintain the integrity of the raw product, we can also remove the condensate from the supply chain completely,” Zielinski attests. This aspect saves both in eliminating the need to remove condensate and in shipping costs. He also says that Torq’s transfer system only involves handling and measuring the product once. This improves the measurement as there is no loss of product by it going into a tank and there is no co-mingling of product. The refiner gets the product he bought. This also allows Torq to be the custody transfer point between the seller and the purchaser at the rail site. Torq is an impartial party that does not benefit from the measurement. This allows the buyer and seller to agree to the volumes and there is no dispute.
Safety is also an important component of Torq’s rail-car-to-truck transfer process. One of the primary safety measures is through the use of a portable, closed-loop system. In addition, a bottom car loading process helps keep potentially toxic vapors from leaking into the atmosphere during transfer. “Oil products can be transferred through a top valve or a belly valve,” Zielinski notes. “Torq uses the belly valve to bottom-load the oil so the vapors are vented back into the truck through a vent line between the rail car and truck.”
To further promote these safety initiatives, each Torq employee goes through a full safety training program called H2S Alive. This safety program educates petroleum industry workers on the hazards of hydrogen sulfide (H2S) gas, ways to protect against exposure and rescue techniques.
Each employee also receives mentor training from a senior operator for at least one month, Zielinski says. “At the end of the month, the employee must pass both rigorous written test as well as a skills demonstration test.”
Expanding Client Reach
The rail network throughout North America is much more advanced and expansive than the pipeline network for crude oil, Zielinski says. Because of this, Torq gives its clients the flexibility to cater to markets that are not served or are underserved by the current pipeline network.
“If producers sell their crude to a pipeline, it can only be delivered to so many predetermined destinations,” Zielinski notes. “Torq’s primary purpose is to integrate the crude oil supply chain system to offer our clients a wider market for their products.”