Railway Age 4/21/20
Rail Tank Cars As Oil Storage “Unlikely For Now”: Cowen
Cowen and Company Freight Transportation Analyst Matt Elkott estimates that there is readily available tank car storage capacity for at least 25 million barrels of crude, which can be ramped up in the coming weeks. However, the Canadian railroads do not appear to have a strong appetite for this business, while their U.S. counterparts may be examining the prospects.
“Crude storage capacity shortages caused U.S. oil futures to plunge into negative territory,” Elkott says. “Could tank cars come to the rescue? Theoretically, yes, they can be part of the solution. We estimate there are at least 30,000 Class 3 flammable liquid tank cars, each with capacity of more than 30,000 gallons, in North America that could be deployed to hold oil. More equipment could become available in the coming weeks as some cars come off leases with limited renewal prospects, while others roll off manufacturing lines into a depressed-demand market.
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