terminal

Corpus Christi, TX, is quickly becoming a strategic hub for U.S. crude oil exports. Since the repeal of the crude oil export ban in December 2015, crude exports from the Sparkling City by the Sea have increased to nearly 500 Mb/d — and that may be just the beginning. Numerous pipeline and terminal projects have been announced to receive, store and ship out a lot more crude from the Permian and Eagle Ford shale plays, with an increasing share of those barrels destined for the international market. Today, we discuss recent developments in crude exports out of South Texas.

Over the past two years the volume of crude oil shipped by rail from Canada has increased ten-fold.  Data from the Canadian National Energy Board (NEB) for the whole of Canada indicates that average rail crude exports in the first quarter of 2012 were about 16 Mb/d. That volume grew to at least 160 Mb/d in the first quarter of 2014. The increase in rail exports of crude is primarily being driven by pipeline capacity constraints. Today we introduce findings from RBN Energy’s latest Drill Down Subscriber report.

Rapid growth of heavy oil sands crude production in Alberta is prompting considerable expansion of storage and pipeline infrastructure at Edmonton and Hardisty. Less well publicized is the growth in conventional Canadian crude oil production – in many cases using horizontal drilling technology. In Saskatchewan, crude volume passing though the Kerrobert hub is increasing and a large rail-loading terminal is planned to open there in 2015 to supplement existing takeaway capacity on the Enbridge Mainline. Today we conclude our analysis of Canadian storage hubs, focusing on Kerrobert.

Crude-by-rail has had a huge impact on the market for tank cars.  Currently there are 53,000 tank cars on back order and more orders are coming in. That’s up from a backlog of 48,000 just a couple of months ago. The tank car manufactures are enjoying every bit of it but for the first time since the ethanol boom, they can’t keep up. In the old days it took 9 months to deliver a new car. Now, there is such a backlog that manufacturers can’t deliver a new car for 24 - 30 months.  Today we will review the rapidly evolving tank car situation based on a recent presentation made by Travis Brock from Strobel Starostka, a construction and rail services firm deeply involved in in the crude-by-rail markets.

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.

Over the next three years seven Gulf Coast region terminal operators will build an estimated 19 MMBbl of new crude oil storage capacity. Those storage expansions are being made in preparation for as much as 3.1 MMb/d of new crude supplies expected into the Gulf Coast refining region over the next two years from new pipeline projects. Today we summarize the efforts that terminal operators are making to get ready for the flood.

Over the past two years oil terminal operators in St. James, LA have built rail receipt facilities that handle over 150 Mb/d of crude oil – most of it from North Dakota. That crude is chasing Gulf Coast prices that can be $20/Bbl higher than the Midwest.  Today we explain how NuStar Energy has expanded their St James crude oil terminal to capitalize on those price differentials.

The Gulf Coast region is the biggest refining destination for the flood of new crude oil being produced domestically and in Canada. Large terminals are needed to receive, store, blend and redistribute this crude to refineries.

News flash!  ---Rail transportation has become a very big deal in the business of transporting crude oil, NGLs and petroleum products!!----The whole world does not revolve around pipelines!   Yup, the media has discovered that hydrocarbons can ride the rails.   Never mind that liquid hydrocarbons have been moving in tank cars for 150 years.   The news is that rail is having a market impact like never before.  And that is because there has been a strategic shift in the way rail transportation is being used by the petroleum industry.   In Part II of our series we’ll dissect the strategies being used and discuss how things are evolving in the world of tank cars.