The US crude by rail industry has expanded rapidly since January 2011 as domestic crude production soared by 1.4 MMb/d over the same period. The growth of crude by rail followed pipeline bottlenecks in the Midwest that caused landlocked inland crudes to be discounted by upwards of $20/Bbl versus coastal destinations. That made shipping oil by rail to the coast a viable proposition in the absence of new pipeline capacity. Crude rail terminals in the Bakken now load over 400 Mb/d for shipment to coastal markets. Today we continue our survey of Bakken crude rail loading terminals.
Check out Kyle Cooper’s weekly view of natural gas markets at
The first episode in this series provided an introduction and overview of the “Year of the Tank Car” (see Crude Loves Rocking Rail). We described the rapid growth in US crude oil production that pressured pipeline logistics and made rail a viable alternative for taking crude to market. The second installment (see Crude Loves Rocking Rail – The Bakken Terminals) began our survey of rail loading terminals with a map and a complete list of facilities in North Dakota.
In the previous episode to this (see Plains, Enbridge and Global) we reviewed three Bakken merchant terminals. Those terminals are mostly third party fee for service facilities that provide crude truck unloading as well as storage, blending, rail loading and pipeline connections. One of the merchant terminals that we cover today – Dakota Plains purchase the crude that they ship at the wellhead and deliver it to refiners rather than just offering transportation services to producers. The other three terminals covered here are traditional fee for service facilities.
All of the episodes in this series can be found at the www.rbnenergy.com website under the Daily Energy Post tab. As you read this series you may find it useful to refer back to the map and table listing of Bakken terminals that we provided previously (click here to download a PDF copy of the map – let us know at [email protected] if you have trouble).
Bakken Oil Express
The Bakken Oil Express (BOE) rail terminal began crude by rail shipments in November 2011. BOE is owned by Lario Logistics – a member of the Globe Resources Group - a US based multinational oil services company. The BOE facility is the only Bakken unit train loading facility on the BNSF North Dakota southern mainline. BOE is operated by Strobel Starostka Transfer and Cogent Energy Solutions is the marketer. The True Company Four Bears Pipeline delivers crude oil to the facility and True subsidiary Eighty Eight Oil Company is the anchor shipper on BOE. There are 14 unloading stations and two mobile transloaders that can receive crude oil by truck. Current crude oil storage working capacity is 389 MBbl being expanded to 689 MBbl this year (2013). The railcar loading facility is enclosed (important to continued operation in the North Dakota winter) and can handle 24 rail tank cars simultaneously (see picture below). Typical load time for a 100 car unit train is 13 hours and BOE has capacity to load 100 Mb/d of crude. The BOE facility also handles drilling and completion materials such as sand and cement. The BOE site has room for future expansion of the crude loading facilities and additional pipeline connections.
Source: Bakken Oil Express (Click to Enlarge)
Dakota Plains Holdings, Inc. is a public company focused on developing crude oil trucking, transloading and marketing in North Dakota. The Company was founded in 2008 and is based in Wayzata, MN. The Dakota Plains Bakken terminal is located at Newtown, ND on the Canadian Pacific (CP) railroad. The first crude loading facility was developed in August 2010. In July 2011 the capacity was increased to handle four 40-car tracks in parallel with loading capability of approximately 50 Mb/d. The facility is described by Dakota as “unifest” (a mix between a unit train and a manifest service see picture below). The company reported handling 20 Mb/d from January to September 2012. During 2013 Dakota is building a loop track capable of handling larger 120 car unit trains more efficiently allowing it to double the current loading capacity. The terminal has a 90 MBbl storage tank.
Source: Dakota Plains Presentation, December 2012 (Click to Enlarge)
Dakota’s business model is to take title to crude oil at the wellhead, pay for transportation and sell to refiners directly. The company has joint ventures with two business partners for transloading, marketing and trucking. Through a 50/50 venture with World Fuel Services a large crude and refined product marketing company, Dakota transload and market all the crude throughput at the Newtown terminal. The marketing joint venture has 1,100 rail tank cars under long-term lease. Dakota has a second joint venture with Prairie Field Services to truck crude oil to the terminal from the wellhead. Dakota ships crude by rail to the US Gulf, the US East Coast and the Canadian East Coast.
The rail terminal at Fryburg, ND is located at the terminus of the 132 mile Bakkenlink crude gathering pipeline project (see map below). Bakkenlink and the Fryburg terminal are both owned by Great Northern Midstream an affiliate of Great Northern Properties LP the largest private coal reserves owner in the US. When completed, the Bakkenlink pipeline will run due south from the Beaver Lodge pipeline hub in Williams County to the Fryburg terminal in Billings County. The pipe received a Federal permit from the Bureau of Land Management in October 2012 and is currently under construction. The current anticipated in-service date for the first section of the pipeline is June 2013.The initial capacity will be 65 Mb/d expandable to 85 Mb/d. Originally the BakkenLink was intended to run all the way to Baker, MT where it was to connect to the Keystone XL pipeline, but when Keystone was put on hold in 2011, BakkenLink opted to terminate the pipeline at the Fryburg rail facility.
The Fryburg terminal has unit train loading capacity of 70 Mb/d and is located on the southern leg of the BNSF mainline railroad. The terminal has 300 MBbl of storage.
Source: www.bakkenlink.com (Click to Enlarge)
Savage Trenton Railport
The Trenton Railport crude loading terminal is owned by Savage Industries. The facility is managed by Savage's Railway and Industry Solutions Group that oversees transloading terminals throughout the United States. The Trenton terminal site includes rail infrastructure and space for future oil field material storage and receiving operations. The facility is located on the BNSF north mainline in Williams County. Savage purchased the terminal site in January 2011 and initially developed a manifest rail loading capability. Since August 2012 the facility has been capable of loading 2 X 108 car unit trains at a time. Load capacity is 90 Mb/d and there is about 300 MBbl of storage onsite. The terminal receives incoming oil from 5 truck bays and a pipeline connection to Tesoro High Plains.
The Trenton Railport terminal is located adjacent to the proposed Trenton Diesel Refinery that is expected to begin construction during the second half of 2013. When it is completed the refinery will be a relatively small topping plant that will process 20 Mb/d Bakken light sweet crude. A topping plant is a simple atmospheric distillation plant (see Refining 101 – Distillation) The Trenton railport will provide crude feedstocks and distribute refined products.
We have now covered nearly all the significant terminals in our detailed survey of Bakken crude by rail. Next time we will cover the two Musket terminals at Dore and Dickenson as well as a few of the smaller facilities. We will also cover Williston Basin terminals north of the Canadian border in Saskatchewan.
Every month the volume of crude being moved by rail out of the Bakken has been increasing. In December 2012 it was up to 64 percent of production or nearly 450 Mb/d (after local refinery consumption). Rail and pipeline takeaway capacity exceeds production comfortably and will likely continue to do so until the end of 2014 at least. We understand that the greater challenge for rail terminal operators now is congestion on the limited routes out of North Dakota that will likely constrain theoretical capacity. That suggests a need for greater rail infrastructure investment by the railroads.
Each business day RBN Energy releases the Daily Energy Post covering some aspect of energy market dynamics. Receive the morning RBN Energy email by signing up for the RBN Energy Network.