Rail Will Be The Way Bakken Oil Is Moved: Pipeline to Move Oil to Crude-By-Rail Terminals -- Spokesperson

The second of two very interesting stories sent in by a reader: Tesoro Logistics could reverse a pipeline system in North Dakota as quickly as March of this year, so it could move oil output from southern drilling areas of the Bakken formation to rail terminals in the north of the state -- Argus Media.

The company estimates most North Dakota takeaway capacity has been built out north of Lake Sakakawea, but oil output has been almost equal on both sides of the lake. That means there will be “a lot of demand in the future” to move barrels from south to north in order to access outbound infrastructure, Tesoro vice-president of logistics Rick Weyen said today at the Bakken Product Markets and Takeaway Capacity conference in Denver, Colorado.

Crude producers are continually looking for feasible ways to reach more outbound capacity, he said. Tesoro's High Plains pipeline system, which currently moves crude from north of the lake to its 70,000 b/d refinery in Mandan, North Dakota, via a 12-inch line could be that solution.

“A lot of rail companies are awfully close to our pipeline. We're working hard with a lot of rail facilities to come up with connection agreements,” Weyen said, adding Tesoro could make announcements on rail facility connection agreements over the next couple of months.

“We think rail is long term, it's going to be the way Bakken crude is moved…the pipeline is there to serve and help the shippers get the crude from the production area to the rail facilities,” he said.

I have no idea how this will all end, but I do remember some folks commenting that once the pipeline is all in place, it's all over for rail. Here is a very different opinion. I find this very, very intriguing, to say the least.