More Pipelines Needed To Move Bakken Crude

September 2013, Vol. 68 No. 9

More pipelines to move Bakken oil from North Dakota to refineries are needed to help ease safety concerns after a crude-carrying train derailed in the state in late December 2013, U.S. Senator John Hoeven, (R-ND), said Jan. 12 on Platts Energy Week. The accident was the third in the last six months that involved the transport of crude by rail.

Hoeven said TransCanada's controversial Keystone XL pipeline, which is designed to move oil sands crude from Alberta to U.S. Gulf Coast refineries, also could play a role in reducing rail transport. In addition, the senator said construction of the line would take about 500 trucks a day off the roads in western North Dakota.

“[C]learly, pipelines are part of the solution,” he added.

Hoeven also cited the Sandpiper pipeline, an Enbridge project now in the planning stages with Marathon Oil as an anchor shipper, as a solution to moving about 200,000 barrels per day (b/d) of state's crude to eastern refineries.

“Most of the pipelines go south. So we need to develop the infrastructure that goes with the energy development the energy renaissance we are having in this country,” he said.

But Hoeven also said stricter safety measures have to be implemented for carrying crude by rail.

Last December, a BNSF Railway Co. train carrying crude oil was derailed and caught fire in eastern North Dakota. Railroads, refiners and producers are still awaiting guidance from federal regulators on what needs to be done to make the rail cars safer.

Hoeven said he had written the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) a year ago and asked it to issue recommendations for double-hulled tank cars.

Crude production from the Bakken is poised to hit the 1 million b/d mark in 2014 and the growing production of the light, sweet oil has made it very attractively priced for refiners on both the East and West Coast.

But pipeline infrastructure from North Dakota east and west is lacking, forcing transport by rail. The growing adoption of crude-by-rail transportation since 2012 means that in the U.S. alone more than 740,000 b/d, or 11 percent of total U.S. output, was being moved by rail by the end of 2013, RBN Energy said in a report that cited American Railroads Association data.

RBN said that about 171 North American rail loading and offloading terminals have been built since 2011 or are under development. Many refiners like Valero and Phillips 66 have rail facilities at their plants.