Update on the Sandpiper Pipeline; Role of Clearbrook; Impact of Rail

PN Bakken is reporting, via Clearbrook Newswire:

A lot of interesting data in that article; the article explains why Bakken was trading at a discount to WTI earlier.

The Enbridge permit request for the Sandpiper project has been disapproved but Enbridge says that minor detail will not slow down its plans, or completion date. I guess Enbridge has not read the Keystone XL story. The Keystone XL foundered when folks figured out what "XL" stood for. As soon as I saw Enbridge use the phrase "unified system" it gave me the willies. US regulators are all concerned about "too big to fail." Enbridge would be better served to market the Sandpiper as a small but necessary pipeline, a backup pipeline in case of a terrorist attack by an American right-wing nut on existing crude oil pipelines and get the backing of Homeland Security. But I digress. 

Some data points:

• some (probably the folks at Clearbrook) say the role of the crude oil hub at Clearbrook, MN, would be lessened if the Enbridge Sandpiper is project approved/built
• the Sandpiper hub at Superior, WI, would negate the need for the one at Clearbrook, MN
• Sandpiper proposed capacity: 600,000 bopd
• Sandpiper is part of Enbridge's Light Oil Market Access program, which would provide a unified system to carry crude from the Enbridge North Dakota system to a new connection with its Lakehead System at Superior
• Two pipelines: a) $2.5 billion Sandpiper link from Beaver Lodge, ND, to Clearbrook, boosting capacity from 224K to 435K; b) the other,  Clearbrook to Superior, initially at 375K
• the report is a bit confusing, but it sounds like pipeline limitations "have seen deliveries from the Enbridge system at Clearbrook from about 93K bopd from 210K causing a decline in spot trading."
• Bakken crude is being delivered to Clearbrook at less than half of volumes at the hub in mid-2012
•  a spokesman says crude is being delivered to Clearbrook mostly to protect pipeline space in case the market recovers
• the article says Enbridge Energy Partners reported that Bakken volumes decreased 16 percent in 4Q12 from a year earlier due to rail shipment of crude oil
• a rail shipper collects better netbacks than on pipe
• CBR: $17 - $19/bbl to the Atlantic Coast
• CBR: $13 - $16/bbl to the Gulf Coast
• I could be wrong, but I believe pipeline is $2 - $5/bbl
• CBR: accounted for 68% of Bakken production in January, 2013; 64% in December, 2012
• Pipelines: 23% of Bakken production
• Tesoro refinery in Mandan: 13% (the refinery: 58,000 bopd)

I still remember the anonymous comment I received months ago suggesting rail was temporary and a flash in the pan. Almost 70% of Bakken crude is carried by rail, and the percentage is higher when one removes the Bakken crude that stays in-state (Tesoro refinery), and despite all the pipeline being laid, the percent may be increasing.