Another Crude-By-Rail Story in the Bakken -- Tesoro Refinery to Ship ND Crude to Its Washington State Refinery

Link here.

U.S. Sen. John Hoeven says Tesoro is planning a $60 million rail shipping project to move Bakken crude oil from western North Dakota to its refinery in Anacortes, Wash.

Data points:

• To be completed in the second quarter 2012
• Tesoro to ship oil to either its Mandan refinery or its refinery at Anacortes, Washington
• Tesoro announced earlier this year a $35 million expansion project at Mandan; increase capacity from 10,000 to 68,000 bbls daily
• The amount of oil from North Dakota to the Anacortes facility will increased from 2,000 bopd to 30,000 bopd
• An unloading facility will need to be built at Anacortes; 12 months to complete; $50 million
• Oil loading facility in Williams County; owned by Rangeland Oil, LLC
• Connected to Tesoro's High Plains Pipeline System
• 20 new permanent jobs will be created at the Mandan refinery (that's 20 more jobs than the president created today -- considering he killed the Keystone XL pipeline, he's got quite a ways to go to get back to even)

I believe the new proposed diesel refinery at Trenton, North Dakota, will have capacity of 20,000 bopd.

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Folks periodically suggest all this activity has all the earmarks of a boom and bust story when they see the stories on NBC's "Rock Center with Brian Williams" or the nightly news. But when I see another company spending $50 million on one project directly tied to the Bakken, I can only assume these guys have done their homework.

I think of the Kashagan story: "After 11 years and $39 billion of investment, ExxonMobil, Royal Dutch Shell, and their partners have yet to sell a drop of oil from what was touted as the world's biggest discovery in four decades......$15 billion over budget .... 8 years behind schedule ... and the project may never even be profitable ...

"The prize for the five main partners is as much as 252,000 barrels of crude a day each from peak output once the second phase is running. That kind of production is growing harder to find worldwide as existing fields age and governments in the Middle East, Russia and Latin America reserve control for state companies."

Did you catch that? 252,000 bopd WITH COMPLETION OF THE SECOND PHASE. And there is no stomach for starting the second phase now! One wonders what production will be in the first phase. Certainly significant less.

To put that into perspective, 5 x 252,000 --> 1.26 million bopd. Folks are predicting as much as 1.5 million bopd from the Bakken in less than ten years, and unlike the Kashagan, the Bakken is already providing a cash flow for the drillers, and a profit.

Let's say, the first phase is half -- 600,000 bopd, and North Dakota is within that target, easily.