Rail is the new pipeline as US West coast refineries see the arrival of output from other parts of the country.
The heat is on for N Dakota oil cars Image: Roy Luck |
With output at an all-time high from oil fields in North Dakota and Montana, the oil train from the northern Great Plains is likely to become a weekly feature, helped by the success of the latest hydraulic-fracturing (fracking) technology.
Until now, pipelines have been the typical means of shipping crude to refineries. However, with a quadrupling of production in the last five years from the shale oil fields in North and South Dakota and Montana, pipeline transport has failed to keep up with demand. Witness the trains of more than 100 cars-long to Puget Sound.
Despite the fact that train transport is about $16 a barrel more expensive than pipeline on longer trips, oil shipments by rail are becoming the latest method of transporting crude across the US. The largest benefit of the railway option is the matter of months required to get oil trains rolling, rather than the years it takes to build new pipelines.
While BNSF Railway is the biggest beneficiary of this oil transport boom, rail is not the only means of shipping crude. Recently, the Port of Olympia was two tankers arrive to deliver domestically drilled crude. The Port, landlords to US Oil and Refining's Tahoma Tideflats' refinery, has also found new business in importing oil-field supplies, such as special sand used in the fracking process.
With North Dakota and Texas now plugging the gap left by decling Alaska crude output, there is a need for new infrastructure. This includes the construction of a $8m million rail yard at the Tideflats refinery, with new loading facilities in Great Plains to fill 700-barrel tank cars with crude oil along with plans for other rail yards and unloading facilities to handle the new shipments at refinery and export ends of the train routes.
Tesoro recently completed a new, $55 million four-track rail yard near its Anacortes refinery 70 miles north of Seattle and BP is seeking planning permits for a $60 million rail car receiving and unloading facility near its Cherry Point refinery near the Canadian border in Whatcom County.