(Wall Street Journal – October 4, 2012) Bakken Crude Prices Rise as Railroad Reach Grows
By Ben Lefebvre -- The rapidly growing crude-oil flow out of North Dakota has broken out of its transportation bottleneck thanks to an expanding railway network, lifting prices for the crude and profits for those who pump it. The growing availability of the North Dakota crude demonstrates how new sources of crude unleashed by hydraulic fracturing are rapidly changing the U.S. oil market and could help drive down the need for oil imports at refineries along the coasts.
"Rail terminals are enabling shipments to St. James [Louisiana], East Coast and West Coast terminals, avoiding the traffic jam" at Cushing, said Rusty Braziel, president of energy consulting firm RBN Energy. "This has pulled some barrels out of the pipelines and resulted in an overall tightening of the supply-demand balance."
Oil production from the shale formation reached 675,000 barrels a day in July, an all-time high and more than twice as much as could be carried by pipeline, according to the latest data from the North Dakota Department of Mineral Resources.
More-expensive Bakken crude eats into the advantage some refiners with ready access to it had. Tesoro, whose refineries in Mandan, North Dakota, and Anacortes, Wash., use the crude extensively, is especially apt to see its profit margins shrink as the Bakken price rises.
"There are a few refiners like Tesoro's Mandan refinery that are not enjoying as big a discount as they were last year," RBN Energy's Mr. Braziel said.
