CBR Ending For US East Coast Refiners -- April 21, 2017

DAPL is flowing.

Largest refiner on US east coast will no longer take rail deliveries of Bakken oil.

Good, bad, or indifferent with regard to one's thoughts about pipelines, think about  it: 425,000 bopd that used to be by rail through Minneapolis, Chicago, etc., will no longer go through those cities. 

Reuters story with data points:

• largest refiner on US east coast: Philadelphia Energy Solutions Inc
• at its peak, took three miles' worth of trains filled with Bakken oil each day
• just five rail deliveries in May; no rail deliveries in June 
• recently getting one unit train per day; one unit train: 75,000 bopd
• rail volumes in the Bakken peaked at 420,000 bopd
• DAPL begins interstate crude oil delivery May 14, 2017
• 1,172-miles long
• western North Dakota to Patoka, IL
• 450,000 bopd
• will connect to large refineries in the Nederland and Port Arthur, TX, area

Update On CBR -- July 25, 2016

The Wall Street Journal has an update on declining CBR. It has a fair number of data points for the archives, and is probably a human interest story, certainly for many on the east coast, but regular readers probably won't find much new in the article.

The changes are evident in North Dakota, once the epicenter of the crude-by-rail trend. Oil output from the state’s Bakken Shale formation has fallen by 180,000 barrels a day from its 2014 peak. Meanwhile, pipeline takeaway capacity has more than doubled since 2010.

EOG Resources Inc., one of the first oil companies to see the potential for trains to relieve pipelines, opened its first rail loading terminal in Stanley, N.D., in 2009. But that terminal hasn’t loaded a train in more than a year, according to Genscape, a data provider that tracks activity at U.S. rail terminals.

“New pipeline infrastructure has been put in place to move significant volumes of oil to market,” an EOG spokeswoman said.

Enough pipeline capacity is coming online to replace all of the current volume BNSF Railway Co. is shipping out of North Dakota, said David Garin, the railroad’s group vice president of industrial products.

BNSF used to transport as many as 12 trains daily filled with crude primarily from North Dakota’s Bakken Shale, carrying about 70% of all rail traffic out of the area. Now it is down to about five a day.

And along with the decline in coal shipping volumes, this is probably not a good-news story for Warren Buffett who owns BNSF. 

But this data point is very interesting:

Even at its height in 2014, crude-by-rail accounted for less than 2% of total rail volumes, according to Association of American Railroads data. But its decline threatens what was once viewed as a sizable driver of growth for the railroad industry, one that many rail companies, along with oil and gas producers, made investments to support.

Between 2010 and 2015, 89 terminals were built or expanded in the U.S. and Canada to load crude on trains, and nearly as many to offload it, according to consulting firm RBN Energy LLC. 

Back to the Bakken:

There could soon be more than enough space to carry away all Bakken oil through pipelines now in the works. Phillips 66 is partnering with pipeline company Energy Transfer Partners LP to develop a pair of pipelines that will bring North Dakota crude to Illinois and then down to Texas.

The endeavor, which will cost close to $5 billion, is expected to take a major bite out of oil train traffic, even though the pipelines will ultimately bring oil to the Midwest and the Gulf of Mexico, rather than to the East and West coasts, where trains have primarily taken it.

Phillips 66 said earlier this year it may still be cheaper to take that oil and put it on a barge for delivery by sea to the coasts than to send it directly there by train.

Something tells me this rail and these loading terminals in North Dakota won't go unused.

Update On CBR From North Dakota -- June 18, 2016

I am surprised. I can't find a recent "million dollar way" post on ND CBR despite many, many stories in the national business media on less crude oil being transported by rail. I was going to add this story as an update to an earlier post, but without a recent earlier post to update, this will have to be a stand-alone post.

From The LaCrosse Tribune:

With lower crude oil prices, North Dakota drillers dramatically cut production over the past winter and spring, but trains continue to roll through Midwestern communities loaded with the volatile cargo.

Data released this week by the U.S. Energy Information Administration show that even as overall volumes of crude rail shipments fell last year, the amount of crude on the nation’s rails last year was still higher than in any year prior to 2014. The 325.8 million barrels was more than twice what was shipped in 2012 and 16 times the level in 2010.

In the first three months of this year, more than 33.6 million barrels of oil were shipped by rail from Midwestern rigs. That works out to more than five fully-loaded trains each day. At the peak of the Bakken oil boom it was about 12 trains per day.

Note to newbies: even if pipeline capacity exceeds supply in the Bakken, CBR won't go away anytime soon. RBN Energy has addressed that recently. 

Jack Kemp's Weekly Fossil Fuel Tweets Coming Up, I Suppose. Stay Tuned -- October 28, 2015

North Dakota farmers happy. Bloomberg is reporting:

Last year, grain handlers like Roger Krueger had no kind words for Warren Buffett’s BNSF Railway Co. After record U.S. harvests, crops piled up all across the Midwest, with few rail cars available to get them to buyers because they were being used to ship more oil and coal.

It’s different now. While farmers are harvesting almost as much this year, the logjams are long gone, said Krueger, a vice president at the South Dakota Wheat Growers Association, a cooperative with 20 loading depots served by BNSF that are used to market all sorts of crops including corn and soybeans.

U.S. rail shipments of grain are the highest in five years, and costs are down from 2014, when delays could last more than two months and compounded the slumping value of crops that had nowhere to go, he said.

The really, really neat thing about this story? Free market capitalism. Can you imagine if the US government had been put in charge to "fix the railroad"? Three letters would say it all. O.M.G. 

Practically none of BNSF’s grain-hauling is behind schedule this year, after the company laid a second set of tracks alongside a single rail line for a total of 90 miles (144 kilometers) west of Minot, North Dakota, and spent more on sidings and new signals to speed trains, said John Miller, chief of the railroad operator’s agriculture unit.

Vintage Santa Fe TV Commercials

Wabash Cannonball, Johnny Cash

Petticoat Junction Theme Song

Monday, August 10, 2015

Initial production numbers have been posted for wells coming off the confidential list over the weekend, today.

Active rigs:

	8/10/2015	08/10/2014	08/10/2013	08/10/2012	08/10/2011
Active Rigs	72	193	184	200	190

RBN Energy: continuing series on Bakken CBR. (Archived)

This time we turn to the future of rail shipments to the West Coast from North Dakota.
The chart in Figure #1 (at the link) provides a summary of CBR shipments to the West Coast from North Dakota. The blue and red shaded areas against the left axis represent crude volumes shipped from Petroleum Administration for Defense District (PADD) II – the Midwest to PADD V – the West Coast.

This data comes from Energy Information Administration (EIA) monthly crude rail movement estimates that began publishing in April 2015 (see A Look At The Rail Track Record). Because the EIA does not break this data down within PADDs we assume that it largely covers CBR movements between North Dakota and West Coast refineries located in Washington State and California. This assumption is based on the location of rail loading terminals in PADD II (most are in North Dakota) and rail unloading terminals on the West Coast that are mostly linked to refineries in Washington and California.

Having made that assumption we further separated out CBR shipments to California from North Dakota (red shaded area) that are reported separately by the California Energy Commission (CEC).

The CBR shipments to Washington (blue shaded area) are simply the EIA PADD II to PADD V totals minus California. Note also that shipments to California are a fraction of the total – just 2-5 Mb/d in 2013 and 2014 and (according to CEC) have been zero since November 2014. So West Coast CBR from North Dakota is almost all headed to Washington State. The yellow line on the chart against the right axis is the ANS premium to WTI crude. ANS – Alaska North Slope - is the West Coast benchmark crude and West Texas Intermediate – WTI crude is the Midwest benchmark.

To sum up – West Coast CBR shipments from North Dakota remain firmly routed in supplying Washington State refineries for the moment. As such – the shipments will expand if and when Shell gets their permit – but only by 65 Mb/d or so. There is also a good possibility that one or more of the rail to marine port terminal projects in Oregon or Washington will eventually be built – that could increase Bakken crude shipments to California. There is also likely to be a slow increase in CBR shipments to California as unload terminals there are permitted – but pipelines such as the Inland California Express may overshadow these in due course. For the moment there is no apparent end of the line for CBR shipments from North Dakota to Washington refineries.

Much, much more at the link. Bottom line: could the Bakken become the option of choice for out-of-state oil for California refineries?

Note: ANS – Alaska North Slope - is the West Coast benchmark crude and West Texas Intermediate – WTI crude is the Midwest benchmark.

Tuesday, August 4, 2015 -- Part I

Active rigs:

	8/4/2015	08/04/2014	08/04/2013	08/04/2012	08/04/2011
Active Rigs	74	192	179	206	182

RBN Energy: CBR in the Bakken, part two. (Archived)

Yesterday (August 3, 2015) Brent crude closed under $50/Bbl for the first time since January 2015. At that price expensive crude-by-rail (CBR) freight costs to the East Coast leave Bakken producers with netbacks not much over $30/Bbl. Yet CBR shipments to the East Coast were still over 400 Mb/d in May 2015 according to the Energy Information Administration (EIA). By 2017 there should be adequate capacity to get all Bakken crude to market by pipeline. But direct pipeline competition against rail to the East Coast is not expected until at least 2020. Today we look at the future of East Coast CBR.

In Part 1 of this series we covered the growth of crude-by-rail (CBR) transportation out of North Dakota from 2012 to 2014. Rapid increases in Bakken production outpaced pipeline capacity and new construction – leading to crude price discounts that helped justify more expensive rail transportation to coastal markets. CBR load terminal capacity in North Dakota increased to over 1 MMb/d in 2013. State data from the North Dakota Pipeline Authority (NDPA) shows that by April 2013 CBR was shipping 73% of Williston Basin output to market. Pipelines – which had carried 56% of crude to market in February 2012 – reduced their market share to 23% by February 2013. Then the price differentials that encouraged the CBR boom began to narrow. The discount of domestic benchmark West Texas Intermediate (WTI) to international crude benchmark Brent fell from an average of $18/Bbl in 2012 to $11/Bbl in 2013 and $6.50/Bbl in 2014. The narrower differentials made it harder for shippers to justify the higher cost of CBR to coastal markets as new construction increased pipeline alternatives. But even though the rail slice of crude traffic declined to just 52% by May 2015 there was still not enough capacity available to get all North Dakota’s crude to market by pipeline and about 0.5 MMb/d was still using rail – primarily to get to East and West Coast markets that do not have pipeline access. That picture is changing now – first because the rate of growth in Bakken crude production has slowed in 2015 in response to lower crude prices – making it easier for pipelines coming online to keep up with new production. And second - new projects are underway to build pipelines from North Dakota to markets on the Gulf Coast and the East Coast of Canada that – on paper at least - provide adequate pipeline capacity by 2017 for Bakken shippers to no longer need CBR. In this second installment we look at how Bakken netbacks have evolved and ponder how new pipelines could impact the future of rail shipments to the East Coast.

End Of The Line For Bakken CBR -- RBN Energy -- July 29, 2015 -- Part I

Active rigs:

	7/29/2015	07/29/2014	07/29/2013	07/29/2013	07/29/2013
Active Rigs	73	192	179	179	179

RBN Energy: the end of the line for CBR in the Bakken? (archived)

Bakken crude-by-rail (CBR) volumes are down this year and pipeline shipments are increasing as production levels off in the wake of last year’s price crash. The trend is encouraged by lower price differentials between domestic and international crude as well as new pipelines coming online. Since 2012 a combination of rail and pipeline has given Bakken producers ample crude takeaway capacity but pipelines alone have not had sufficient capacity on their own. However, with production slowing down, pipeline capacity is catching up and by 2017 there should be enough pipelines to carry all North Dakota’s crude to market. Today we start a two part series asking whether pipelines can replace CBR from North Dakota.

Friday, July 17, 2015 -- Update On Pipeline Activity In PADD 4 (MT, CO, UT, ID)

Active rigs:

	7/17/2015	07/17/2014	07/17/2013	07/17/2012	07/17/2011
Active Rigs	74	196	189	209	178

RBN Energy: Impact of New EIA Natural Gas Storage Regions on Storage Predictions. See the new EIA natural gas "fill rate" regions at the link.

Analyst estimates for this week's Energy Information Administration (EIA) Weekly Natural Gas Storage Report before its release were rallying around an expectation of a 95-Bcf injection, according to the Wall Street Journal's survey of storage analysts. The actual number reported by EIA yesterday was a 99-Bcf injection, more or less in line with analyst expectations. But predictions may get a bit harder later this year. The EIA is preparing to redraw its US natural gas storage map and begin reporting inventory data in new regions later this year (2015). In August, prior to the launch of the revamped report, it will release a file with historical data for each of the new regions. The historical data will for the first time allow modelers to run their regressions and gather statistical information by which to rebuild their storage models designed to foretell the weekly EIA storage number. In the meantime, we did our own unscientific analysis of the regional breakdown and how it will change transparency in gas storage activity.

*********************************

Update On Pipeline Activity In Rocky Mountain Region, PADD 4

A few days ago EIA posted CBR / pipeline shipments out of Rocky Mountain Region.

Today the Denver Business Journal posted a story on that data, as well as noted some pipeline activity in the region:

The region’s pipelines carry crude to customers in the Midwest and the Gulf Coast and those shipments have risen from 184,600 barrels per day in 2010 to 264,400 barrels per day in 2014.

And that figure is rising.

Through the first four months of 2014, crude oil shipments out of the Rocky Mountain region via pipeline have averaged 429,000 barrels per day — up 132 percent from 2010.

And several pipeline projects are underway to add capacity between the Rocky Mountains and Cushing, Oklahoma, a major pipeline and storage hub.

Among the projects, SemGroup Corp.’s White Cliff Pipeline will be expanded to a be able to handle up to 215,000 barrels per day. That project is expected to be finished in late 2015, the EIA said.

Also underway is the expansion of the Grand Mesa Pipeline, owned by NGL Energy Partners LP. That project will boost the pipeline’s capacity to a total of 200,000 barrels per day and is expected to be finished in the fourth quarter of 2016.

Finally, Tulsa-based Magellan Midstream Partners has its own project, the Saddlehorn Pipeline, which will have a capacity of 200,000 barrels per day. That project is expected to be done in the second quarter of 2016, the report said.

Three new (or expanded) pipelines mentioned: over 600,000 bopd out of PADD 4 --just four states -- Colorado, Wyoming, Utah, Montana and Idaho.

************************

New Health Care Clinic Opens In Watford City

The Dickinson Press is reporting:

The health care picture in Watford City is improving with Sanford Health opening a 1,900-square-foot clinic and adding visiting specialists while a new hospital employee housing facility has been completed.

Starting Aug. 11, Sanford specialists will begin seeing patients at the new clinic at 116 8th St. NE offering cardiology, podiatry and orthopedics services along with free injury and sports medicine screenings.

More at the link. 

*****************************

Update On Typhoon Off West Mexico / South of Baja California

 Spiraling out to sea.

CBR Slowdown Worse Than Predicted -- Bloomberg -- March 27, 2015

Back on March 19, 2015, this was one of the top stories of the week: CBR plummets. That linked a Bloomberg story.

A week later, Bloomberg, again, is reporting:

The slowdown that North American railroad companies had been bracing for in crude oil shipments has turned into a rout, with volumes falling faster than executives had predicted.

With energy companies scaling back drilling after prices for the commodity fell about 50 percent since July, industry executives and analysts anticipated that demand for hauling crude and extraction materials such as frac sand and pipes would slow after a four-year surge. They didn’t expect it to slow this much this fast.

“The impact is occurring more quickly than the rails originally projected to investors,” said Matt Troy, an analyst with Nomura Securities International Inc. in New York. “The consensus view was that very high double-digit growth would moderate to low double digits, and as we have seen in recent weeks we’ve broken that floor and in some cases gone negative.”

Rail stocks and tank-car leasing are reflecting the dwindling traffic. The Standard & Poor’s 500 Railroads Index posted its biggest weekly decline since October and lessors’ rates for oil cars have fallen by about a third in the last six months. 

One would have hoped the economy, after a gazillion dollars in stimulus would have taken off by now to offset the slowdown in oil but that obviously isn't happening. About the only thing taking off right now is increasing violence in the Mideast. 

CBR Plummets -- March 19, 2015

Bloomberg is reporting:

Rail shipments of crude and refined products fell last week to the lowest level since October 2013 after a derailment shut a track in Illinois for four days. 

Petroleum shipments by rail have fallen since last summer as plummeting crude prices have caused the biggest slowdown of oil drilling on record. BNSF Railway Co. shut its mainline near the town of Galena, Illinois, from March 5-9 (2015) after a derailment, causing delays and reroutings. 

Last week’s shipments were down 25 percent from the peak of more than 17,000 carloads set the week of December 13, 2014. Petroleum traffic on rail lines more than doubled from 2011 to last year, as booming oil production from North Dakota and Canada overwhelmed pipelines and forced shippers to look for alternative transportation methods.  

BNSF, the largest crude-by-rail shipper in the U.S., shut its mainline after a train carrying 103 cars of crude oil derailed and caught fire. The closing caused delays of up to four days and forced BNSF to reroute some trains, the company said in an online advisory March 8. BNSF can’t say for certain whether the shutdown is the cause of the lower numbers, company spokesman Mike Trevino said by e-mail. 

Traffic on the line is now back to normal, according to BNSF.

No mention of Amtrak in the article. A four-delay for Amtrak in that part of the country is probably the norm.

BNSF Blocking Oil Tank Cars To Ease Rail Traffic Jam -- Bloomberg -- November 12, 2014

Bloomberg is reporting:

BNSF Railway Co., the carrier owned by Warren Buffett’s Berkshire Hathaway Inc., is blocking some shippers from adding tank cars to its system in a bid to prevent a worsening of the gridlock that sparked regulators’ ire.

BNSF, which has come under scrutiny this year from the U.S. Surface Transportation Board over late grain deliveries, has told some oil shippers its network can’t accommodate more tank cars, said Mike Trevino, a company spokesman. In June, BNSF and Canadian Pacific Railway Ltd. were ordered by the board to report plans for resolving the service disruptions.

While BNSF has said it’s spending $5 billion this year to add workers, rail cars and expand track, Berkshire acknowledged in a filing last week that the railroad’s service is still “well below” its standards. Compounding the problem is the prospect of a record soybean and corn crop in the U.S., which will put additional pressure on railroads.

The tea leaves suggest Bakken production will drop below 1 million bopd by the end of the year (remember, we won't know the December, 2014, production until mid-February, 2015). The numbers coming out in a few days will be for the month of September, 2014.

Long, Long Article On BNSF In Montana -- September 28, 2015

This is a must-read, must-bookmark article. Often these articles disappear over time. The Billings Gazette has a long, long story on BNSF, CBR, and the agricultural, coal, and automobile shipping backlog.

Some data points:

BNSF is spending $160 million in Montana this year to expand rail capacity, and is also hiring 450 people in the state. The swelling workforce shows in Forsyth, where outside Fransen’s depot office, the company parking lot is full and the pay is well above average for the area. Starting pay for BNSF conductors is $60,000 a year after 13 weeks of training. The only prerequisite is a high school diploma. It doesn’t take too many workers with that size salary to stimulate the economy of a small town like Terry where rail construction is underway.

And this:

That’s a lot of investors with wagers on BNSF’s iron horse to not only show, but win. No community has more on the line than Shelby, which launched its rail industrial park a few years ago after turbines for North Central Montana’s wind farms began rolling into town. Shelby gets 45 to 55 trains a day, according to Mayor Larry Bonderud. The mayor would like to see the number of trains increase to 65, where it was before the Great Recession.

“We’re seeing more agriculture commodities, more value-added ag commodities,” Bonderud said. “We’re seeing coal come up from the south and being interchanged to the Canadian Pacific,” which crossed the border and picks up loads in Shelby.

Bonderud said you could see the rail traffic picking up if you knew what to look for. Not only because oil tankers and grain cars were rolling down the track, but also because recession-idled shipping container cars began leaving the seldom-used side tracks across Montana, which were lousy with the specialty cars used to move shipping containers between Chicago and the West Coast.

Bonderud said BNSF is making the necessary track improvements, none bigger than a 60-mile double-track stretch between Glasgow and Minot, ND, that allows incoming and outgoing oil and agriculture trains to travel more freely.

Remember that Dickinson Press story telling us that more CBR would result in longer waits at railway crossings? Here, we are told that prior to the Great Recession as many as 65 trains a day rolled through the northern tier. Now, it's only 45 to 55 trains a day. Something tells me ....

Imagine how bad this would all be if there was no "war on coal."

It's a long, long article. Many, many story lines. 

Regular readers know that I have the highest respect for BNSF and anyone "blaming" BNSF for these problems either has an agenda, or doesn't understand the business.

And it's the folks in Minnesota, Iowa, and Nebraska, farm states as far I know, that still favor CBR over oil pipelines -- having killed the Keystone and looking to kill the Sandpiper.

The last chokepoint for BNSF across the northern tier is a small river in Idaho. The small town located near the river doesn't want BNSF to put in a second bridge to complete the double-track project across the northern tier (previously reported). They cite ... environmental concerns.

Crockett's Theme, Jan Hammer

I see Europe won its third straight Ryder Cup. Did anyone even watch? I see that Jeff Gordon won at Dover today. "Chase for the Sprint Cup" (from wiki):

Under the new system (2014), the Chase field is expanded to 16 drivers. But unlike previous versions of the Chase, drivers are eliminated from title contention as the Chase progresses.

The bottom four of the top-16 drivers are eliminated from title contention after the third race (Dover) in what is called the "Challenger Round", as points are reset to 3,000 points. [That's what happened today.]

Then the new bottom four are eliminated after the sixth Chase race (Talladega) in the "Contender Round," while the points all reset to 4,000. The "Eliminator Round" involves axing the drivers 5th-8th in the points after the penultimate race at Phoenix, and the top four drivers have their point totals reset to 5,000 so that they are tied for the final race at Homestead-Miami for the title run.

Of these four drivers, the driver with the best finish at Homestead is then the crowned series champion.

CBR And Other Rail-Related Stories -- September 25, 2014; Don't Whine For Me, Mr Bakken

Updates

September 27, 2014: another story to add to the list of those whining about CBR but not demanding more pipeline. The Dickinson Press is reporting:

Runaway oil production could slow road traffic as drivers face longer delays to cross train tracks in many congested regions, a U.S. study released on Friday predicted.

Oil, coal and grain shipments are taxing the national rail grid as the deliveries of those commodities are expected to climb along with commercial shipments in the coming years, according to the report from the Government Accountability Office, an investigative arm of Congress.

Freight movements on the tracks are due to rise 51 percent over 2007 levels by 2040, according to the Transportation Department, and so exceed 28 billion tons per year.
One factor is oil train deliveries out of North Dakota’s energy patch that neared 250,000 carloads in 2012 compared with roughly 10,000 in 2007, according to the study.

The increased oil shipments will translate into tie-ups at highway-rail crossings, though the study said it was hard to judge what areas of the country would be most affected.

As soon as I saw "runaway" -- which, by the way, was the first word in the story -- I knew it would be another "whining" story. Note also the dateline of the story (Washington, DC): this was no doubt sent out by some "advocacy group" disguising the "press release" as a story.

"... it was hard to judge what areas of the country would be most affected." Well, one could start with the northern tier, Minnesota to Washington State, and then go from there. I can't make this stuff up.

Original Post

Marketplace is reporting:

The electric utility that serves the Duluth region is mothballing four coal-powered generators, and not because the Environmental Protection Agency told it to.

No, Minnesota Power is idling these generators for three months because the railroad isn’t delivering enough coal. Railroads are crazy busy— carrying oil from North Dakota for one thing— and the delays are driving their customers nuts. 

Al Rudeck is the vice president of strategy and planning for Minnesota Power. The Burlington Northern Santa Fe railroad has delivered the utility’s coal for decades. I asked him: Has this kind of thing happened before?

"This is unprecedented," he said. "We’ve never had to shut our units off because we can’t get the coal we need. This year they’ve had a lot of challenges on the rail system, in terms of congestion, weather, and a lot of business."

Railroads have also had a lot of unhappy customers.

Farmers can’t get a bumper crop to market.

On some days, according to the Alliance of Automobile Manufacturers, car-makers have had as many as 200,000 vehicles sitting outside factories, waiting to be picked up by trains. 

That's interesting about the auto-makers. I posted that same prediction some time ago; this is the first time I've seen the "predication" "validated." Don't whine for me:

Don't Cry For Me, Argentina; Evita, Madonna
Don't cry for me, Minnesota. The Minnesota and Iowa farmers have pretty much decided they prefer CBR instead of crude oil pipelines. The Dickinson Press is reporting the Minnesota PUC took the unusual step to further complicate any movement on this issue:

An official of the union representing workers who hope to help build an oil pipeline through northern Minnesota is raising alarms over regulatory delays.

David Barnett, a special representative to the United Association of Journeymen and Apprentices of the Plumbing and Pipe-Fitting Industry, said Wednesday a recent decision by a Minnesota regulatory board to look into alternate routes could put Enbridge’s Sandpiper pipeline in jeopardy.

The Minnesota Public Utilities Commission voted earlier this month to study the environmental implications of six system alternatives for the pipeline, which would carry Bakken crude oil from western North Dakota to Clearbrook, MN, and then Superior, WI.

“We want it to be the best environmental route for the state of Minnesota,” Barnett said.

“But we don’t think that this course of action is geared at finding the best environmental route.”

The PUC also separated the Certificate of Need application from the route-permitting process, which are typically considered jointly.

Enbridge spokeswoman Lorraine Little stopped short of saying the $2.6 billion project was at risk, but said the company expects it to be delayed.

********************************

A contributor to another board had some positive news with regard to BNSF efforts to relieve the logjam and shortage of coal reaching those Minnesota power plants:

Deliveries will be increasing shortly in my opinion.  I live along the Burlington Northern southern mainline in Montana and ride my bicycle along a couple hundred miles of their routes. 

BNSF started new sidings in 4 locations between Fallon, MT, and Forsyth, MT (80 highway miles), and have completed 3 for sure now.  

In addition, BNSF has installed new routing gear at Terry, MT, to remotely switch trains at 40 mph from the west to either: a) the old Milwaukee tracks heading east through southern North Dakota; or, b) northeast into northwest North Dakota and the Bakken-Three Forks shale developments.

There were large numbers of brand new Cat/Deere excavators, scrapers, etc at each of those sites.  

Then last week end I took the Amtrak train east from Wolf Point, MT, to Minot, ND.  In one spot I saw 2 brand new Cat backhoes -- I no longer know the numbers but they would have been about 225's when I used them a lot and 5 comparable Deere backhoes -- not a scratch on them.  

The Amtrak schedule has been lengthened to give more time to get through the construction areas plus Amtrak warns of up to 6 hour delays.  My train managed to make up enough time for the extended schedule coming in less than an hour late each way.  

From Williston east, there is now double track most of the way.   And Amtrak is rerouted away from Rugby and Grand Forks as those tracks are in the process of being upgraded -- I suspect those would go into Duluth.  

Last year the mines in Colstrip on the southern route were not even willing to price low enough to get any business.  The tracks which carried coal north from Colstrip mines to Forsyth and the main BNSF track sat idle with excess coal cars piled up on that single line.  Trainloads of coal did come through Forsyth, Miles City, Terry, but not as many as we are used to.   

I strongly suspect BNSF will be capable of carrying at least twice the freight on the two routes which was carried in past years in just a few more weeks.  

We don't see nearly as much oil going west as coal going east, but with longer sidings, they should be able to move trains much more effectively.   

Capitalism works wonders--it just takes a bit of time.

Wisconson Coal Plant Could Close -- Lack Of Coal -- BNSF Unable To Supply Contracted Coal Due To Rail Backlog; Wasn't Wind Supposed To Take Up The Slack? -- July 30, 2014

Updates

August 3, 2014: The coal-rail supply story is affecting the entire midwest, not just the La Crosse power plant. is reporting that the issue is getting federal attention (these are folks from the political party trying to kill the coal industry in the US and slow down BNSF trains to a 5 mph crawl):

U.S. Sen. Tammy Baldwin, D-Wis., released a statement saying: “Following last winter’s devastating propane shortage, I am committed to ensuring that Wisconsinites do not face another energy crisis as temperatures drop. My staff and I will continue to work with BNSF, the Surface Transportation Board, and Dairyland Power to find a solution to this looming fuel shortage.” [Perhaps he needs to also work with POTUS.]

State Sen. Bob Jauch, D-Poplar, and Democratic state Reps. Janet Bewley of Ashland, Nick Milroy of South Range and Stephen Smith of Shell Lake also sent a letter to the National Surface Transportation Board in Washington D.C. The state lawmakers urged the federal agency to take immediate steps to increase coal shipments to Midwest utilities to avert an energy crisis similar to the propane shortage last winter. [Perhaps they need to write POTUS or meet him on the golf course; the three state reps and POTUS could make a foursome.]

Back to the story:

Midwest Energy Terminal in Superior is experiencing similar issues. The facility which provides coal to several power plants along the Great Lakes and St. Lawrence River, including Minnesota Power, is struggling to get supply.

With supplies down by about 1½ million tons, President Fred Shusterich said this is the time of year his customers are stockpiling coal to prepare for the January-March shutdown of the Soo Locks, which brings most shipping to a halt on Lake Superior. This year, difficult ice conditions persisted into May. Yet the trains that typically bring coal from the west to the Superior waterfront facility are coming only half as often as usual. He said that while a typical 123-car rail shipment has a five-day turnaround, it now takes about 10 days to get the shipment.

Minnesota Power spokeswoman Amy Rutledge said the utility also is dealing with coal shipments that have slowed, but the situation is not critical and their supplies are fine now. They also are working with BNSF railroad.

 My recommendation: Minnesota loves wind power. They need to turn on the turbines.

Original Post

LaCrosse Tribune is reporting:

An ongoing rail backlog that has stranded grain shipments across the Great Plains is now threatening to shut down a La Crosse-area power plant.

Dairyland Power Cooperative says it could run out of coal at its Genoa generating plant by January if the BNSF railroad doesn’t rapidly accelerate deliveries.

Halfway through the summer shipping season, the coal supply has dwindled to “perilous levels” and is falling further behind each week, according to a memo sent last week to lawmakers.

The La Crosse-based utility, which serves about 250,000 mostly rural customers, relies on coal to generate power at plants in Alma and Genoa. Alma is served directly by a BNSF rail line, while coal is shipped to Genoa on barges loaded at a terminal in southeast Iowa.

I assume President Obama is not concerned. It's all part of the plan.

A big thank-you to Steve, tonight; he has sent me a number of stories I never would have seen otherwise. The ONEOK story was particularly interesting. Thank you.

Five (5) New Permits -- The Williston Basin, North Dakota; BR, Halcon Each With One "High IP" Well; 3/3 Bakken Wells Go To "DRL" Status -- July 8, 2014

Wells coming off the confidential list Tuesday:

• 26063, drl, MRO, Swift Eagle USA 31-15TFH, Moccasin Creek, no production data,
• 26856, drl, Hess, EN-State D-154-93-2635H-6, Robinson Lake, no production data,
• 27064, drl, Hess, EN-KMJ Uran-154-93-2734H-8, Robinson Lake, no production data,
• 27211, 51, Legacy Oil, Legacy Et Al Berge 8-11 2H, Red Rock, a Spearfish well, t2/14; cum 4K 5/14

Active rigs:

	7/7/2014	07/07/2013	07/07/2012	07/07/2011	07/07/2010
Active Rigs	189	188	213	166	132

Five (5) new permits --

• Operators: Newfield (3), Whiting, Enduro
  Fields: Sand Creek (McKenzie), Stoneview (Divide), Green River (Stark)
• Comments:

Wells coming off the confidential list over the long weekend were posted earlier; see sidebar at the right.

Six (6) producing wells completed:

• 24372, 2,995, Statoil, Broderson 30-31 2H, Banks, t6/14; cum --
• 25090, 1,352, Statoil, Edna 11-2 5TFH, Camp, t5/14; cum 2K 5/14;
• 25898, 1,846, MRO, Azure USA 31-15H, Moccasin Creek, t5/14; cum 7K 5/14;
• 26118, 2,023, HRC, Grev 157-100-30B-31-2H, Marmon, t5/14; cum 6K 5/14;
• 26961, 1,204, KOG, P Moen 155-99-14-11-2-3H3, East Fork, t5/14; cum 7K 5/14;
• 27017, 993, Whiting, Bartleson 44-1TFH, Sanish, t5/14; cum 4K 5/14;

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Stabilizers To Remove Volatile Gases Before Shipping CBR

From SeekingAlpha

Bakken oil isn't stabilized to make it less volatile, raising risks

• Energy companies invested hundreds of millions of dollars when they started extracting oil from shale formations in south Texas a few years ago to make the volatile crude was safer to handle, but the failure to do so at the Bakken shale is coming back to haunt the oil industry as the U.S. government seeks to prevent fiery accidents of trains containing North Dakota oil.
• Only one stabilizer, which can remove the most volatile gases before transport, has been built in North Dakota and it hasn't begun operation, according to a WSJ review; if the government mandates the use of stabilizers, companies would have to make big investments in equipment which could slow Bakken's development.
• Oil producers are fighting the perception that the biggest risks come from Bakken crude, almost all of which is moved by rail, but safety officials and lawmakers say the dangers extend far beyond North Dakota.

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Improving The Odds: Why Shale Oil Really Is Different

From Rigzone

John Kemp, at Reuters, London, writes:

Critically, the source rock, migration pathway, reservoir rock, and trap, must be found together and in the correct geological sequence. This combination of circumstances is extremely rare. 

But shale is both the source of the petroleum and the trap (because it is so impermeable). Rather than hunting for small pools of oil and gas trapped by faults or rock seals, shale producers can go straight to the source.

US Oil Tank Car Rules: Same As Canadian Annoucement Earlier, BUT Voluntary In US

U.S. takes voluntary approach on crude oil tank car rules

• The U.S. Department of Transportation announces steps to improve the safety of shipping crude oil by rail, but unlike its Canadian counterpart, is taking a voluntary approach to the phase-out of older tank cars known to be vulnerable in derailments.
• The agency recommends energy producers that ship by rail discontinue the use of older DOT-111 model tank cars; in contrast, Transport Canada two weeks ago required a three-year phase-out of older tank cars.
• DOT is matching Canada’s requirement that railroads disclose to state and county emergency management officials the routing, volume and frequency of crude oil shipments.

Chicago May Divert CBR From Downtown To Suburbs

A reader send me this link to a video story out of Chicago.

Bakken CBR Terminals Closing? Just A Rumor -- Federal Government (The Same One That Said "You Can Keep Your Physician")

Reuters at Rigzone is reporting:

Oil shipments by rail from the booming Bakken shale in North Dakota have slowed over the past two days, data showed on Friday, but a U.S. regulator knocked down rumors that some terminals have been shut down due to new rules.

Oil traders are on edge over concerns that an emergency order from the U.S. Department of Transportation this week requiring shippers to test all crude before it is carried by train could cut into deliveries of Bakken crude, as much as 800,000 barrels per day (bpd) of which is shipped by rail.

U.S. crude oil futures prices briefly spiked as much as 60 cents per barrel, or nearly 1 percent, earlier on Friday on speculation that two terminals may have been shut down for non-compliance.

The U.S. Federal Railroad Administration said talk of shutdowns was a rumor. The Pipeline and Hazardous Materials Safety Administration's inspections in North Dakota have not caused the closure of any terminals, an agency source said. Prices held onto earlier gains even after the denials.

However, data from industry intelligence group Genscape did show that loadings at a dozen major Bakken rail terminals had fallen to around 345,000 barrels per barrel on average for the past two days, down from about 550,000 bpd over the previous two weeks, an unusual but not unprecedented dip.

Genscape, which uses cameras to monitor the number of tank cars filled with crude at the terminals, provided no explanation for the dip. Analysts said the ebbing flows could also be due to other factors, including a shortage of oil tank cars and slower rail traffic due to severe winter weather.

This is the first page of a three-page article at the link.