Washington State

Refineries in Washington state have been reliable buyers of Bakken-sourced crude oil during the Shale Era, receiving an average of about 145 Mb/d — all of it by rail — over the past two-plus years. But a newly approved Washington law slashing the allowable vapor pressure limit for crude being unloaded from rail tank cars could hinder future growth in crude-by-rail shipments from North Dakota to the Evergreen State, or force Bakken producers to remove more butane and other “light ends” from the crude oil they rail west. It’s such a big deal that the state of North Dakota has indicated it will file suit to kill the new law. Today, we discuss Washington’s new law and its potential effects on Bakken crude oil producers.

Crude by rail (CBR) shipments from North Dakota to West Coast destinations peaked in January 2015 at 170 Mb/d – falling since then to average 140 Mb/d in 2015, January through May. The vast majority of these shipments have moved to four refineries in Washington State – providing a cheaper alternative to the Alaska North Slope (ANS) crude staple these refineries have run for decades. There is big potential to expand CBR shipments to West Coast Ports and to California but building the infrastructure has proven painstakingly slow. Today we discuss the long term fate of West Coast CBR.

Earlier this month, US Midstream logistics firm Targa pulled out of a crude by rail marine dock project at the Port of Tacoma, WA. The plan was to rail crude from the Bakken to barges and tankers for shipment to refineries in Washington State and California. Other rail projects in California like the Valero Benecia terminal have been delayed by permitting issues. Some folk are questioning whether these setbacks mean that crude- by rail to the West Coast has gone off the boil. Today we begin a two part review of West Coast rail prospects.