BNSF vs ONEOK.
Meanwhile, receivers of Bakken crude, such as Phillips 66, have been on an absolute tear. They buy the cheaper Bakken crude and sell the refined gasoline at prices tied more closely to the higher price of Brent.Warren owns a lot of Phillips 66, also.
With the glut backing up at Cushing CBR is more attractive because of its versatility. It doesn't appear this will be solved anytime soon.
ReplyDeleteWith the Permian Basin coming on strong in renewed production along with the Woodford in Oklshoma, along with others Cushing is going to be a bottle neck for along time. They won't be able to update fast enough. The producers in the Williston Basin most likely see this and are unwilling to sign long term contracts. Until WTI and Brent are about the same price will there be a renewed push and interest for a pipeline ending up at Cushing.
Most likely Bakken oil will be shipped to the refineries on the west and east coast where they can get a better price than WTI and still pay for the higher rail cost.
As big as the refining capability is on the gulf coast even they will have a hard time absorbing all this increased production. Better to keep surfactant refining regional to avoid being venerable to weather and other potential factors that may cause a sudden reduction to their refining capability.
I agree completely. I am really getting a kick out of this. I'm beginning to think refiners on the East Coast and West Coast are getting very excited about Bakken oil in lieu of Brent oil.
DeleteThis flexibility of rail is really a game changer.
It appears they are grabbing every barrel they can get their hands on and are taking measures to handle more of that Bakken crude.
Delete