The lyrics to the theme song from vintage television series "The Beverly Hillbillies" included "black gold, Texas tea," which described the Lone Star State's lucrative crude-oil production. For several North American railroads, the lyrics could be updated to "black gold, North Dakota tea" or "black gold, Saskatchewan tea" to describe the traffic-generating and moneymaking potential of crude-oil production in the Bakken Formation.
More commonly called the Bakken Shale, the 200,000-square-mile formation covering parts of Montana, North Dakota and Saskatchewan contains large oil reserves, which only a few years ago became more economical to tap because of horizontal drilling and other modern extraction techniques. Today's historically high foreign oil prices also help make crude produced from a shale more competitive to produce and sell domestically.
As more oil companies establish wells in the Bakken, railroads stand to transport more inbound carloads of frac sand, drilling pipe and other materials used to build wells or horizontally drill. And as more crude oil is extracted, the roads figure to transport lots of it to refineries and other end users thousands of miles away in the Gulf Coast, California, Oklahoma or points in Canada. Rail transport is significantly cheaper than truck and more flexible than pipelines to move crude long distances, and an economical way to deliver inbound materials, so it's starting to become oil producers' mode of choice.
Source: Progressive Railroading
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