Oil companies in North America are investigating alternative options of tank storage as the glut of cheap crude grows.
Bloomberg reported yesterday some oil majors are seeing whether rail cars could be a viable option for fuel storage as North America runs out of capacity to take the excess fuel.
Rail yards in Texas, Saskatchewan and Manitoba are all being touted as potential places to store the excess oil. This comes while companies debate whether to hold on to oil rather than sell it for a loss as prices hit record lows.
This is not the first time rail cars have been used to store oil – back in 2016 when prices dropped there were some companies that used this novel storage solution.
However, this type of storage comes at a risk. Rail cars can only be housed on private train tracks in the US, due to Federal Railroad Administration regulations. There are also safety concerns about leaks and spills when fuel is stored using this unconventional method.
North America isn’t the only region struggling to deal with a glut of fuel. In the United Arab Emirates, Fujairah Oil Terminals said yesterday its port would reach storage capacity within the coming weeks.
The drop in demand for fuel exports has fed the glut, with producers looking to store, rather than sell, crude due to low prices.