RBN Energy:
New crude pipeline capacity being added in the Rockies to ease
congestion will compete directly with rail terminals built or planned in
the region. Some of these rail terminals are purpose built to take
barrels off the pipelines for delivery to West Coast refiners or perhaps
to facilitate blending of heavier Canadian grades with lighter shale
crudes. The competition between pipelines and rail in the region
underlines a key accomplishment of the post-shale crude distribution
system - the advent of greater choice for producers. Today we describe
growing rail alternatives in the Rockies.
In Part 1
we described the congested pipeline situation in the key Rockies
pipeline hub at Guernsey, WY that developed in the past 3 years as new
crude production in the Bakken, the Rockies and Western Canada converged
in the region. At present, pipeline capacity into Guernsey is greater
than outgoing capacity to Wood River, IL on the Spectra Platte pipeline.
If local refineries in the Rockies do not soak up surplus crude then
the mainline out of Guernsey becomes oversupplied and shippers need to
find alternative routes to market. Three new pipeline projects are
expected online this fall to relieve that pipeline congestion. These are
the Hiland Partners Double H 50 Mb/d pipeline from North Dakota and
Montana into Guernsey, the True Company Butte Loop pipeline that will
flow up to 110 Mb/d from Baker Montana to Guernsey and the Tallgrass
Energy partners 230 Mb/d Pony Express pipeline from Guernsey to Cushing.
Then last week (May 7, 2014), after we posted Part 1, in an analyst
call, Spectra Energy Partners discussed the possibility of building a
twin to their existing Express-Platte pipeline system from Hardisty,
Alberta through Guernsey to Wood River that could double the flow of
Canadian oil through the Rockies (see Figure #1 below). That development
could increase Rockies congestion in the future but no details are
available yet. In this episode we look at the growth of rail loading
takeaway capacity that competes with the new pipelines and compare the
two transport alternatives.
We have previously reviewed takeaway capacity from the Rockies in our Bananarama in the Niobrara
series a year ago (April 2014) when we looked at both pipeline and rail
developments. We also detailed rail terminal developments in the region
a month earlier as part of our Crude Loves Rock’n’Rail survey.
What follows is an update on the status of these rail terminal
developments. Table #1 at the linked article summarizes the larger crude rail loading
terminals developed so far, or on the drawing board to come on line this
year or next. These terminals between them offer as much as 483 Mb/d of
rail loading capacity in Colorado and Wyoming.
Much, much more at the linked article with great graphics, tables.
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