Oil and Gas logistics refers to the transportation of drilling equipments, extracted crude oil and natural gas and transportation of refined products from one place to another. Petroleum logistics covers entire phases from upstream to downstream. Oil and gas logistics synchronizes with all kinds of equipments from multiple origins to the areas that are difficult to access with the continual concern for manpower and environment.
With the advent of shale oil boom, significant opportunities are created for the railroads as a means to transport equipment, people and oil. Railroads are being used to haul the special sand called as frac sand, acids, pipes and other chemicals required in the shale extraction process. Once the extraction process is carried out, rail is being used to carry away shale oil and gas and waste products.
Optimum utilization of rail has created a surge in the demand for cars that can carry crude oil. New production sites, which do not have pipeline network utilizes rail cars, for transporting crude oil and natural gas from the exploration site to the refineries. Pipelines are costly and time consuming to build and are often subject to construction delays as it requires numerous permits. Rail car companies are reaping the benefits, experiencing a backlog of orders for petroleum carrying cars and are reporting strong financial results.
Railway has to build additional infrastructure to keep up with demand in some shale producing regions. The Bakken shale field in North Dakota is the best example. In the year 2013, Bakken oil output hit a record of 727,149 barrels per day and majority of the oil was carried out by trains. Rail has become the most favored mode of transport in the area as it is cheaper than trucking and is more flexible than pipeline.
Oil and gas logistics takes place in various phases such as upstream logistics, midstream logistics and downstream logistics. Upstream logistics includes transportation of all the drilling equipments such as drilling rigs, Christmas tree and blowout preventer to the exploration location. Midstream logistics involves transportation of extracted crude oil and natural gas from drilling location to the storage location. Once the crude oil and natural gas has been stored in tanks and terminals, then it is transported through various means to the refinery for further refining processes. Crude oil and natural gas once refined into varied petroleum products, they are transported through pipelines, ships and trucks to the end users. Oil and gas logistics comprises of all the activities such as air and sea chartering, hazardous material handling, customs brokerage, supply order management, purchase order management and offshore supply base management.
Some of the key drivers of the oil and gas logistics market are new discoveries of oil and gas fields and growing economies. However, oversized equipments and remote location of drilling can hamper the growth of the market. Ample opportunities are there for oil and gas logistics market as demand for petroleum products is rising at a healthy rate.
Some of the key players in the business of oil and gas logistics are Gulf Agency Company Ltd, Agility Project Logistics Inc, Kuehne + Nagel Company, BDP International, DB Schenker, Crown Logistics, Neovia Logistics, A.Hartrodt GmbH, SGS Logistics, SDV International Logistics and Bollore Africa Logistics Ltd among others.
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