Crude Differentials

Bakken crude-by-rail (CBR) volumes are down this year and pipeline shipments are increasing as production levels off in the wake of last year’s price crash. The trend is encouraged by lower price differentials between domestic and international crude as well as new pipelines coming online. Since 2012 a combination of rail and pipeline has given Bakken producers ample crude takeaway capacity but pipelines alone have not had sufficient capacity on their own. However, with production slowing down, pipeline capacity is catching up and by 2017 there should be enough pipelines to carry all North Dakota’s crude to market. Today we start a two part series asking whether pipelines can replace CBR from North Dakota.

Data from our friends at Genscape indicates that an average 150 Mb/d of Bakken crude is being unloaded at the Plains All American and NuStar Energy partners rail terminals at St. James, LA. That is down from 250 Mb/d just two years ago (April 2013) but still represents a substantial target for pipeline developers to aim for. The first significant project to offer pipeline service from North Dakota to St. James is being developed by Energy Transfer and Phillips 66. Today we review the project details.