March 14, 2015 – The Street
High Rail Costs Crimp PBF Energy & PBF Logistics
By: Carleton English
As the economics of transporting crude oil by rail in the U.S. become less compelling, New Jersey-based PBF Energy (PBF) and its master limited partnership PBF Logistics (PBFX) may be feeling a pinch.
PBF Logistics was spun off from PBF Energy in May 2014 to be a "fee-based, growth-oriented" MLP with a focus on owning and operating refined petroleum products, as well as transportation and storage facilities.
Since the spin off, the cost of crude oil delivered by rail is $40.25 per barrel compared with a cost of $34 per barrel for imported crude, according to a recent report written by Sandy Fielden of RBN Energy, an analytics and consulting firm focused on energy. (Fielden estimates the cost of transporting crude by rail is $14 per barrel.) In 2011 and 2012, transporting crude by rail was more cost effective than importing, Fielden said.
Now the dynamic is changing.
"The lower spreads reduce the incentive to move crude from inland basins to coastal refineries by rail because the latter is a more expensive transport option compared to pipelines," Fielden wrote, noting that there has been a 30% decline in crude transported by rail in 2015.
Read the full story here: http://realmoney.thestreet.com/articles/03/14/2016/high-rail-costs-crimp-pbf-energy-pbf-logistics
