Increasing Bakken Crude Oil Reaching California

Despite all the talk about problems with CBR, rail and crude oil continues to roll.

Bloomberg is reporting:

California, the third-biggest refining state in the U.S., is about to see a flood of oil by rail from places such as Canada and North Dakota as suppliers seek to tap a market isolated from the rest of the country.

The Western U.S. may bring 500,000 barrels of light oil by rail a day in 2015 as the region’s refiners seek to replace shrinking output in California and Alaska and more costly foreign imports, Mark Smith, Tesoro Corp.’s vice president of development, supply and logistics, said at a conference yesterday in Glendale, California. California refineries can run 1.63 million barrels a day, the most in the U.S. after Texas and Louisiana, government data show.

The region has become one of the most depending in the nation on foreign oil as the West lacks pipeline access to crude from shale supplies in the middle of the country. Companies from Alon USA Energy Inc. to Valero Energy Corp. are looking to tap the market with projects that would bring more crude into the West by rail.

“The West Coast is one of the last frontiers where foreign imports really have a stronghold, and there’s not a lot of alternatives,” Smith said yesterday at the Crude By Rail 2014 conference organized by Houston-based American Business Conferences. “Obviously there is a huge opportunity here” for oil shipped by rail. 

It costs $9 a barrel to send North Dakota’s Bakken crude to Washington and $4 to $5 more to carry it by ship from there to California, according to Valero, the world’s largest independent refiner. Tesoro said the cost of delivering a barrel by rail from the Bakken to California would range from $9 to $10.50.

Royal Dutch Shell Plc posted a price of $88.33 a barrel yesterday for Bakken crude in North Dakota. Alaska North Slope oil typically used in West Coast refineries cost $109.70 at 12:05 p.m. New York time today, according to data compiled by Bloomberg.

California may get more than one-quarter of its crude from Canada and U.S. states other than Alaska should six proposed rail-offloading projects win approval, state Energy Commission data show. Companies including Valero, Phillips 66 and Plains All American Pipeline LP support the projects.

A huge "thank you" to a reader for sending this story. While I am traveling, I will be posting less.  Sorry.