I lived in and worked out of Crosby for two years in the early 90s. It was a nice little town, but like most of rural North Dakota was struggling to stay alive. There had already been one oil boom years before, and while I was there I recall only seeing one drilling rig working just west of town. There was plenty of oil exploration going on and I was companies running jug lines of geophones several times. They knew more oil was there, it just wasn't until fracking was developed and crude oil prices soared that it became economical (aka profitable) to go after it.

No doubt that new drilling will soon slow to a halt. I imagine that the higher production/lower cost wells will continue to produce to maintain some kind of cash flow for their owners. I wonder what the annual avoidable costs are for an already drilled well compared to the figures being quoted which I am guessing are for developing the well from scratch?

As mentioned, there are other pipeline projects that are being completed besides the XL. I know that truckers are real hesitant about hauling a limited amount of heavy oil because they have to clean their trucks before hauling lighter products. I'm not sure if the XL pipeline would have any issues switching back and forth between the heavy Canadian tar sands crude versus the lighter Bakken crude. Even if the XL pipeline is approved, do the current oil economics still justify its expedited construction and long term operation?

I have also heard that WATCO is working on building a new rail line to the pipeline terminal at Cushing, Oklahoma. Evidently they are trucking the oil from unit trains at the current end of an existing line to the pipeline terminal.

You have to consider current oil train traffic patterns and how the XL pipelines or oil price drop might affect them. There seems to be a substantial flow of oil by rail to feed existing refineries in Los Angeles, Bakersfield and the Pugent SOund areas, as well as in the Northeast. These refineries appear to have either lost their local supply and/or have gotten oil by ocean tanker. If overseas oil is that much cheaper than what new US or Canadian oil can be produced, then I am sure the refiners will switch back to imported oil.

We are in a world economy so what we do here either production or consumption is now just a part of the equation. As demand drops, the price of frac sand and other oil supplies will begin to drop, reducing the cost of oil. The new infrastructure that has been put in place has been at an extraordinary cost due to the demand, but as demand drops it and labor costs will inevitably drop also - at least until the next boom/bust cycle. Bakken crude will always be more expensive to produce compared to new oil in Texas and the Permian Basin due to differences in weather, exiting infrastructure (including the transportation system) and distance to market.

All of us have already proven that we are begrudgingly willing and somewhat able to pay $4 a gallon for gas and diesel, so it will only be a matter of time before so event (natural or contrived) will cause prices to rise and maybe even hit $5+ next time. The big oil companies just need to wait for all the little companies to fail so they can scoop them up, and then OPEC needs to figure out how to create a new oil crisis to raise prices back high enough to support the lifestyle they've become accustomed to.

We will seem some major changes in rail traffic patterns. The decline in domestic coal production, the hesitancy to approve any coal export facilities, the uncertainty of the current oil situation, and don't forget that when the third set of locks open on the Panama Canal open we may see a drastic adjustment of containers (both import and reloaded 53s) away from the West Coast (maybe that will settle the current Longshoreman's issues).