One thing we love about the oil and gas industry is its capacity to change and to surprise, and often. U.S. crude oil production recently approached 7 million barrels a day, the highest level since 1970—and this is an amazing increase of about 50% since the summer of 2008.

Our oil production could grow by another 900,000 barrels per day in 2013 to 7.3 million a day, according to the most recent forecast by the Energy Information Administration. The government can’t keep up with what’s happening out in the field—this projection is some 300,000 barrels a day higher than its estimate in December.

But as you know, moving all those barrels from the wellhead to the refinery is the industry’s newest challenge.

Because of this, the U.S. railroad industry is enjoying a renaissance of its own. Just recently, the Phillips 66 refinery in Bayway, New Jersey, the largest refinery on the East Coast, announced it will be getting 50,000 barrels per day, for five years, from the Bakken shale in North Dakota. The oil will be shipped by rail to Albany in upstate New York and from there, moved by barge down the Hudson River to New Jersey.

Phillips 66 has already ordered 2,000 railcars for this effort. Statoil, a big Bakken producer, announced it will lease 1,000 railcars. Bloomberg reports lease rates have soared and the three largest companies that manufacture railcars have unprecedented backlogs.

The terminals where the cars are loaded are also valuable, and construction of many new ones has been planned. Rangeland Energy’s rail-loading system known as COLT, North Dakota’s largest open-access crude oil marketing hub, was acquired by Inergy Midstream LP in late 2012 for $425 million, one of the first rail hubs for oil to take money off the table.

Oil by rail has become a mini-industry in its own right. According to the Association of American Railroads, crude shipments rose to 340,000 barrels a day last year, from 11,000 barrels a day in 2007.

“A year ago in 2011, 17% of the crude out of the Williston Basin was moving by rail. [By the fall of 2012], BNSF alone was responsible for moving up to 45% of the basin’s production,” said Dave Garin, BNSF group vice president, industrial products, writing in our sister publication, FUEL. (See .)

“Today BNSF serves 23 destinations…and by the end of 2013, will offer service from shale plays throughout North America to 35 inland and coastal refineries and ports…,” he said.

But this marriage between black gold and the iron horse is not exactly new. The ties between the oil industry and the railroads go back a long way. In the 1860s, during the birth of the industry, teamsters in Pennsylvania used to load their wagons with barrels of oil in order to bring supply to the nearest railroad head. From there the crude was moved to refineries. In the 1870s, monopolist John D. Rockefeller tried to control all the railroads so he could dominate the movement of oil throughout the U.S.

Informal exchanges where crude oil buyers and sellers met to set prices—a forerunner of Nymex—developed in a curbside area near the tracks in Oil City, Pennsylvania, according to

The Prize, Daniel Yergin’s great oilfield history. Eventually wooden pipelines were built instead, much to the dismay of angry railroad workers, but for a few years, rail was it.

Then too, the railroads also played a role in the growth of some E&P companies. They had been granted millions of acres of land throughout the West by the federal government in the 19th century as American civilization pushed beyond the Mississippi River. Such a land grant formed the basis for Union Pacific Railroad spinning out an E&P company of its own, Union Pacific Resources Inc.

UPR thus owned 7.5 million acres—and fee minerals under every other section, known as the checkerboard land grant. Thanks to this bounty, it was once one of the largest independents around, until in 2000 it was acquired by Anadarko Petroleum Corp. for $4 billion in stock. This now represents the core of Anadarko’s Rocky Mountain holdings, including its leading stake in the Niobrara play in Colorado.

With the economic importance of crude oil rising as fast as production, this year Hart Energy’s annual series of DUG conferences and exhibitions will focus on oil as much as natural gas. Please join us April 3 and 4 in Fort Worth for the original DUG, this year focused on the Permian Basin and other key oil-rich regions. New this year, on April 22 and 23, we are joining with the city of Tulsa for DUG Midcontinent, which will delve into the hot Mississippi Lime and other Midcontinent plays. And May 30-31, we return to Denver for DUO Reservoirs, about the Bakken, Niobrara and other oily plays. We hope to see you there as our speakers discuss all the opportunities.