As much as 240 Mb/d of light sweet crude from North Dakota is currently being shipped from the Bakken to St. James LA in what has become a pipeline on wheels. More crude is also moving to the Gulf Coast from Western Canada by rail and new destination terminals are being developed along the Mississippi River. But increased pipeline capacity to the Gulf Coast is a growing competitive threat to these rail destinations. Today we survey rail destination terminals East of the Mississippi.
The first episode in this crude by rail series provides an introduction and overview of the “Year of the Tank Car” (see Crude Loves Rocking Rail). We describe the rapid growth in US crude oil production that put pressure on pipeline logistics and made rail a viable alternative for moving 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. The follow up episodes covered EOG, Hess and Inergy, Plains, Enbridge and Global, Bakken Oil Express, Dakota Plains, BakkenLink and Savage and Bakken terminals north of the Canadian border in A Plethora of Terminals in the Williston Basin. We discussed the development of rail terminals loading heavy oil sands bitumen crude in Western Canada in two episodes Heat It! (Bitumen Economics Part 1) and Part 2. The last episode on rail loading covered terminals built outside the Bakken and Canada in the Niobrara, Eagle Ford, Permian and Anadarko basins as well as Cushing, OK (see Load Terminal Craze). This is the third episode in our survey of rail destination terminals with the first two covering the East (see East Coast Delivery Terminals) and West (see West Coast Destinations) Coasts respectively.
The complete series can be found at the www.rbnenergy.com website under the Daily Energy Post tab. In this episode we continue our survey of destination terminals with a look at crude rail unloading terminal in the Gulf Coast region East of the Mississippi.
Although there are some movements of crude by rail from the Permian Basin and the Eagle Ford to St. James, LA, the majority of the crude being received East of the Mississippi is light sweet crude from the Bakken or heavy sour crude from Western Canada. Crude coming from the Bakken is shipped by BNSF and is largely destined for St. James, LA where it can be offloaded into storage and or redistributed to refineries in the area by pipeline or barge. Crude coming from Western Canada is mostly shipped by Canadian National (CN) railroad that provides direct service to several terminals on the Mississippi river via its US affiliate Illinois Central Railroad. Unlike the West and East Coast destination terminals that we covered in the previous two episodes of this series, all the rail unloading facilities built and operating so far East of the Mississippi are distribution centers for multiple refineries rather than dedicated facilities for particular refineries. There are two reasons for this. First the existing pipeline and inland waterway infrastructure along the Mississippi River allows producers shipping crude to the Eastern Gulf to reach multiple refiners via one location. Second, most of the refineries in the area are used to receiving crude shipments by barge or pipeline and have seen no need to invest in exclusive crude rail unloading facilities.
Regular readers of this series will be familiar with the layout below. We describe the terminal facilities that we have identified and then list them in summary tables. This time there is only one table for all the terminals discussed that we include at the end of the descriptions (see Table #1 way below).
The Bakken St. James Shuttle
We previously covered the two companies (Plains All American and NuStar) that are unloading crude from rail at St. James in our series on Gulf Coast terminals (see Back to the Delta). The Plains All America rail terminal can offload up to 140 Mb/d from unit trains and has been running at full capacity recently. Plains have two loading terminals in the Bakken at Van Hook and Manitou. The larger terminal is Manitou (65 Mb/d) on the BNSF network that can ship crude direct to St. James. The NuStar terminal in St James is joint owned with EOG resources that use 80 Mb/d of the 100 Mb/d capacity to unload crude from their own production. EOG has a rail terminal in the Bakken at Stanley that ships up to 75 Mb/d exclusively to St. James and they also have production in the Permian Basin and Eagle Ford, some of which is also shipped by rail to St. James. Like Plains, the NuStar terminal at St. James is running at close to full capacity. NuStar is in the process of developing a second unloading terminal at St. James that will more than double their capacity to over 250 Mb/d. The new capacity will belong exclusively to NuStar. At the moment the crude by rail shipments from North Dakota to St. James are the closest thing to a pipeline on wheels that the US energy industry has seen. As much as 240 Mb/d of crude is being loaded onto unit trains and shipped down this route with a stream of empty rail tank cars returning to load up again. That’s railing crude all right!
Heavy Canadian Crude to Mississippi River Terminals
In contrast to the railroad river of Bakken crude, heavy crude from Western Canada is moving down to the Eastern Gulf Coast much less efficiently and in smaller quantities. That is because most of the crude coming out of Western Canada by rail destined for the Gulf Coast is heavy bitumen that is difficult to handle (see Heat It! (Bitumen Economics Part 1) and Part 2 ). If producers ship bitumen crude by rail with little or no diluent then it has to be heated for loading and unloading – meaning that specialized receipt facilities are required. Terminals with those special facilities have been slow to develop in the Gulf Coast region although several are in operation this year. The quantity of heavy crude coming out of Western Canada by rail is however still constrained by the capacity of the loading facilities there – where unit train scale facilities are only now being developed.
Of the three heavy crude unloading terminals developed so far on the Mississippi River two are cooperative ventures between CN railroad and the terminal owners. These are an LBC Tank Terminals facility in Baton Rouge, LA and ARC Terminals in Mobile, AL. It would appear that CN railroad is investing in these facilities to encourage Western Canadian heavy crude shippers. CN is the only railroad that has rail-loading capacity close to the oil sands production region so it makes sense for them to try and drum up business this way. LBC Terminals are expanding their crude storage and rail receipt facilities and adding heating equipment to handle bitumen crude. ARC Terminals are also expanding storage and have the capability to handle heavy crude as well as lighter grades. The ARC terminal can handle 75 Mb/d. Both these facilities transfer crude oil to barges for onward shipment to area refineries. A third CN railroad facility further north on the river at Natchez, MS is operated by Genesis Energy and its initial throughput of about 12-15 Mb/d of heavy crude is being shipped by Southern Pacific from the Lynton load terminal in Alberta.
We identified two more East Gulf Coast merchant terminals that are up and running today. The first is another Genesis Energy terminal in Walnut Hill in the western Florida Panhandle. This terminal is a fully operational unloading facility that can handle 116 car unit trains. The terminal provides rail to barge service to refineries in the Eastern Gulf and is located on the short line Alabama Gulf Coast Railway connected to BNSF. Crosstex Energy owns the second merchant terminal, which forms part of their Riverside fractionator facility in Geismar close to Baton Rouge, LA. The rail unloading facility is quite small and until recently could only handle 4.5 Mb/d but has been upgraded this year to15 Mb/d. Crosstex unload crude oil and natural gas liquids onto barges or into pipelines. The terminal is connected to the CN railroad and all the current capacity is committed to Bridger Logistics who ship crude for producers in the Bakken, Niobrara, Permian and Eagle Ford basins.
Two additional facilities are in the process of being built to go into service during 2014. The first is the Genesis Energy Maryland terminal just south of Baton Rouge, LA. That terminal is located on the Kansas City Southern (KCS) railroad and will have connectivity to barge and pipeline distribution. The Maryland terminal provides crude by rail access to one of the largest refineries in the US, ExxonMobil’s 500 Mb/d Baton Rouge plant but this is not believed to be an exclusive arrangement. The second terminal under development is the Indigo Resources facility in Osceola, AR located on a BNSF railroad. That terminal will be a very large distribution facility with 5 rail loops to accommodate unit trains and 140 Mb/d unloading capacity. The Osceola terminal will unload crude from rail tank cars onto barges for onward distribution to lower Mississippi refineries.