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Go Your Own Way – More Gulf Coast Rail Terminals Handling Canadian Heavy Crude

Seems like every other week a new loading or unloading terminal project is being announced to move Western Canadian heavy crude by rail to somewhere on the Gulf Coast. If they all get built there will be at least seven unit train load terminals operating in Alberta by 2016 with over 550 Mb/d capacity. Six unit train terminals are planned or being built to unload Canadian heavy crude to deliver to Mississippi Gulf Coast refineries (~400 Mb/d unload capacity) and three unit train terminals (~350 Mb/d) are operating or being built to deliver to Texas Gulf Coast refineries that will handle Canadian crude. Today we survey unloading terminals on the Gulf outside the CN direct network.

If you are new to the topic of moving heavy Canadian crude (bitumen) by rail you can bring yourself up-to-speed by looking at previous posts on growing Canadian bitumen production (see Heat it!  Bitumen Economics Part 1) and the options for moving heavy bitumen crude by rail – including various levels of dilution with light hydrocarbons known as “diluent” (see Heat it! Bitumen Economics Part 2).

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In the first episode in this series we attempted to answer two key questions that determine the fate of Canadian heavy crude shipments by rail (see Go Your Own Way – The Rail vs. Pipeline Bitumen Challenge). First - is rail capacity needed to supplant a shortfall in available pipelines now or in the future? Second can the cost of bitumen by rail transport compete against pipelines? We concluded that there is no clear answer to these questions. In the second and third episodes we surveyed the rail terminals currently being planned and built to load heavy crude in Western Canada (see Go Your Own Way Alberta Rail Load Terminals Part 1 and Part 2). In the third and fourth episodes we surveyed 8 rail terminals on the CN direct network that are able to handle heavy crude today or plan to be able to handle heavy crude in the future on the Mississippi Gulf Coast. This time we will run through the operating or planned terminals outside the CN direct network that deliver to Mississippi Gulf refineries as well as equivalents on the Texas Gulf Coast in Houston and at Port Arthur. We have confined our survey to those facilities that are handling Canadian heavy crude or have expressed plans to do so.

Eastern Gulf - Gateway Terminals

The Seacorp Holdings owned Gateway Terminal is located on the Mississippi at Mile Marker 177.3 close to St Louis, MO (see picture below). The terminal serves all Class 1 railroads  (BNSF, UP, CN, CP, KCS) via the Alton and Southern shortline. Gateway can unload 120 car crude unit trains onto barges for delivery to refineries on the Mississippi and Ohio rivers. The terminal throughput capacity onto river barges is 50 Mb/d (the barges are 30 MBbl capacity – see Good Year for the Barges). Gateway currently handles mostly Bakken crude but is investing in infrastructure to handle Canadian heavy crudes. They are constructing a steam heat boiler system planned to be online 1Q 2014 that will heat coiled and insulated tank cars carrying heavy crude. Gateway is initially targeting unit trains from Alberta that carry “railbit” with a 17 percent diluent content (less than pipeline spec dilbit crude that has 30 percent diluent). Moving railbit to barges is easier than handling raw bitumen because the latter would require heated tanks and heated barges.

Source: Gateway Terminals (Click to Enlarge)

Anticipated shipping times for a unit train from Alberta to St. Louis would be 7 days, discharge in St. Louis would take 24 hours and barge time to the Gulf Coast would be 7-8 days. Gateway also has facilities to load refined product onto rail tank cars – giving shippers the option to “backhaul” condensate to Canada on unit trains to be used or sold as diluent. The backhaul concept is generating interest because of the possibility to save costs by shipping diluent purchased in the US versus Canadian prices, but thus far we have not heard of volume being actually moved this way. (If you have, please let us know at info@rbnenergy.com)  One obvious constraint is that heating the rail tank cars to remove heavy crude (i.e. bitumen) would prohibit loading diluent for a backhaul until the cars cooled down, which may take 24 hours or more - incurring higher rail tank car lease costs.

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