BNSF

During the past two years the US domestic crude transportation business has been revitalized by a huge increase in shipments of crude oil by rail. In the Bakken region alone over 600 Mb/d of crude is shipped to market by rail. The number of rail terminals in producing regions loading crude oil onto rail tank cars has increased from a handful at the end of 2011 to 88 and growing today. A further 66 crude oil unloading terminals have been built or are under construction. Today we summarize the crude oil terminal build out by region and by railroad.

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.

Henry Hub natural gas futures prices are up 90 percent since their 10 year low of $1.907/MMBtu on April 19, 2012 – closing at $3.872/MMBtu on Friday. Over the same period the price of Gulf Coast ultra-low sulfur diesel fell by 4 percent to $3.027/gal.  Nevertheless if you use liquefied natural gas to power a rail locomotive the equivalent fuel cost is about $0.48/gal (before adding in liquefaction and other costs). That is the reason why BNSF is taking a second look at LNG powered locomotive technology and Shell is building LNG plants in Louisiana and Sarnia.  In today’s blog we review the appeal of gas-powered locomotives.

The dramatic growth in North Dakota crude by rail during 2012 included large unit train terminals built to load 80 Mb/d or more. At the same time smaller companies successfully operated alongside the big guys – loading manifest trains at out-of-the-way terminals. North of the border in Saskatchewan, Canadian railroads are advertising their terminal facilities but most have limited capacity. Today we continue our crude by rail series with a look at the plethora [1] of smaller Bakken terminals.

The latest crude production estimates from North Dakota show continued growth to a new record of nearly 770 Mb/d in December 2012. The North Dakota Pipeline Authority estimates that 64 percent of that crude was transported to market by rail in December – up from 58 percent in November. Today we continue our survey of North Dakota crude rail loading terminals with an in-depth look at three facilities that between them can load 250 Mb/d of crude.

In the space of just over one year North Dakota crude rail takeaway capacity has reached close to 1 MMBb/d.  According to the North Dakota Pipeline Authority 58 percent of October 2012 Williston Basin production of over 800 Mb/d was transported out of North Dakota by rail. There are now 18 crude loading terminals operating in North Dakota on the BNSF and Canadian Pacific (CP) railroads. Today we continue our series on crude by rail with a North Dakota terminal inventory.

The US energy midstream sector will remember 2012 as the “Year of the Tank Car”. Venerable pipeline companies were reduced to investing in rail terminals. Although reluctant at first, coastal refiners embraced the margin boost that crude by rail provides them. Producers signed up to move landlocked crudes by rail to coastal destinations in search of higher prices.  Petroleum shipments increased 46 percent from 370 M carloads in 2011 to 540 M carloads in 2012. Rail car manufacturers struggled to meet an order book of 40,000 rail cars and the backlog for new delivery is 18 months. Today we begin a crude by rail series.