Friday, February 22, 2013

No Keystone? No Worry? Rail Making Up The Difference

Slate is reporting:
The Keystone XL is designed to transport 830,000 barrels per day. Over the past two years or so, domestic railroads have increased their transport capacity by an amount equal to about 55 percent of what Keystone is supposed to provide.
There’s nothing new in moving oil by rail. In the late 1860s, John D. Rockefeller began investing in railroad tanker cars, a move that saved him the cost of building barrels to hold his product. The oil baron’s control over the Cleveland-area refining market allowed him to negotiate favorable shipping rates with the railroads.
U.S. and Canadian oil producers aren’t waiting for the Keystone XL or other pipelines; they are building rail-car terminals so they can ship their product to market. In North Dakota alone, oil producers have built rail terminals capable of handling nearly 1 million barrels of oil per day. Refineries are also building rail terminals.
Last month, Delek U.S. Holdings, a subsidiary of the Israeli energy company Delek Group, announced that it will begin refining 15,000 barrels of Canadian crude at its El Dorado, Ark., refinery. All of that oil is being shipped in by rail. A refinery in Delaware, owned by PBF Energy, recently completed a rail terminal that will allow it to take up to 110,000 barrels of crude oil per day. The Sunoco refinery in South Philadelphia as well as a Phillips 66 refinery in Bayway, N.J., are also ramping up their ability to accept more crude by rail.
Earlier this month, Sandy Fielden, an analyst for energy consulting firm RBN Energy LLC, reported that about 1 million barrels per day of new rail-unloading capacity is being built or planned in the United States. Fielden says that “the crude-by-rail express came from nowhere on the radar screen” to become one of the biggest energy stories of 2012. And Fielden says that railroads have shown themselves to be “faster and more flexible than traditional pipeline development.”
Long article. Great article.

Fracking the Bakken also "came from nowhere on the radar screen."

But back to crude-by-rail: one could argue that crude-by-rail began with EOG's terminal in Stanley back in 2009. From RBN Energy, earlier today:
EOG was the pioneer of the crude-by-rail resurgence in North America, building the first unit train facility in the Bakken – in service during December 2009. While much of the industry thought EOG was grasping at an antiquated technology, EOG ignored the disparagement and succeeded in redefining the economics of crude oil transportation. EOG’s terminal in Stanley, ND (Montrail County) is dedicated to the company’s proprietary production and additional crude that the company purchases.

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