Tectonic Changes in Crude Oil Loading and Unloading: Plains All American Rail

Updates

December 24, 2012: Plains All American rail -- SeekingAlpha.com

The move highlights the transformational currents under cutting the pipeline business. As crude oil has been unable to transverse the current pipeline system to reach the refineries on the coasts, the railroads have stepped up with more direct routes that bypass the congested Cushing, OK oil hub. Not only is it a boon to railroads struggling with weak coal shipments, but exploration and refinery companies are access to better pricing than currently available. Is this a solid long-term plan or short-term moves that will back fire? Spending limited capital on short-term benefits can have lasting impacts to asset quality.  

The Presentation

You can see the PAA Rail presentation here, December 13, 2012.

Click on PDF link when you get to the PAA webpage. The presentation shows PAA Rail with two oil-loading rail terminals in North Dakota:

• Manitou, ND: capacity, 20,000 bopd; future capacity, 2H12: 65,000 bopd (not part of the 5-terminal deal; already owned by PAA (if I understand the presentation correctly)
• Van Hook, ND: capcity, 35,000 bopd; future capacity, 2H13: 65,000 bopd  (acquired in most recent deal)

There will be two loading terminals in the Niobrara:

• Tampa, CO: expected capacity, 65,000 bopd, expected operational, 2H13
• Carr, CO; current capacity, 15,000 bopd; future capacity, 2H13, 30,000+ bopd (acquired in the five-terminal deal

The terminal acquired in this 5-terminal deal in the Eagle Ford:

• Gardendale, TX: current capacity, 40,000 bopd

The unloading facilities:

• Bakersfield, CA
• St James, LA
• Yorktown, VA (not part of the 5-terminal deal)

For newbies: think of 65,000 bbls of oil in one 100-unit train. (note: the link is to a post more than a year old, so prices have probably changed)

Original Post

Back on December 7, 2012, I posted the "biggest story of the day," the Plains All American deal to buy five (5) crude oil rail terminals serving the Eagle Ford, the Bakken, and the Niobrara.

Three quick bullets:

• the Eagle Ford will likely surpass the Bakken
• regular readers already know the potential of the Bakken
• yesterday, the story that Niobrara estimates have soared

Now, today, Motley Fool has a story on the PAA / crude oil rail terminals.

Plains picked up five crude oil rail terminals from the U.S. Development group for $500 million. Four of the terminals are operating, and the fifth is under construction.

Three loading terminals: three terminals are for loading oil, one each in the Eagle Ford, Bakken Shale, and Colorado's Niobrara region.

Two unloading terminals: the two unloading terminals are in St. James, LA, and Bakersfield, CA.

Once the acquisition is official, Plains rail business will sport some impressive stats, including terminals on the East, West, and Gulf coasts, a crude oil loading capacity of 250,000 barrels per day, and an unloading capacity of 350,000 bpd.

For those of us with a passion for analyst expectations, Credit Suisse responded to the deal by increasing its 2013 and 2014 EBITDA estimates for Plains by $85 million and $98 million, respectively. It popped next year's EPS estimate up $0.19 for good measure.

So,

• Bakken oil to Yorktown on the East Coast,
• Niobrara oil to Bakersfield on the West Coast, and
• Eagle Ford oil to the Gulf Coast

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