Posted on 07/18/2011 5:59:47 AM PDT by thackney
San Antonio-based refiner Tesoro Corp. said Friday it will spend $50 million to boost its delivery of North Dakota Bakken shale crude oil to its Anacortes, Wash., refinery.
The improvements will boost delivery of Bakken crude to as much as 30,000 barrels a day from the 1,000 to 2,000 barloading rels a day the plant receives now.
More Bakken crude will make up for declining Alaska North Slope production and replace more costly imported oil Tesoro must buy for the plant, the company said.
“The primary benefit to Tesoro is the lower feedstock cost by railing it to their refinery in Anacortes,” said Stacey Hudson, research associate at the Houston office of Raymond James & Associates.
To accommodate the boost in crude from the Bakken shale, Tesoro will build an unfacility for the oil at the Anacortes plant.
Once Tesoro secures permits, construction of the unloading area will take nine to 12 months. When the Anacortes rail project is completed, it will be offered to Tesoro Logistics LP, a Tesoro subsidiary and master limited partnership formed this year.
Tesoro also said Friday it signed an agreement with Sugar Land-based Rangeland Energy LLC that grants Tesoro access to Rangeland’s crude-oil loading terminal and pipeline facility in North Dakota. The Rangeland facility will have a direct connection to Tesoro Logistics’ High Plains crude oil pipeline system and will be in service in the first quarter of next year.
The train will allow Tesoro “to leverage our advantaged logistical position in the Bakken as well as provide a high quality, lower cost feedstock supply to the refinery,” Tesoro CEO Greg Goff said in a statement.
Lowering the cost of crude oil remains a strategic priority for the company, Goff said.
So, it’s cheaper now to haul crude on a train than to build and move it through a pipeline?
Right now the Bakken is somewhat bottlenecked in pipeline capacity going South to most of the refineries resulting in oil prices in the area being lower than comparable oil imported in.
Much of the oil for NW Washington has traditionally come from the Alaskan Supply. With falling output from them, the shortfall is typically imported from overseas. The rail cost on existing rail would certainly be cheaper than coming across the Pacific.
Building a pipe would open Tesoro to a dozen or more environmental group lawsuits and the Barkey administration’s dislike of energy projects. I estimate the freight rate to be $4,000-$5,000 per car so assuming 500 bbls/car, the freight bill would be $8-$10/bbl.
Maybe not cheaper, but a whole lot faster. The main problem with the Bakken right now is the ability to transport the oil to the refineries. The permits and lawyers required for permission to build a pipeline could tie things up for years, especially with Barky & his buddies in charge.
That’s what I thought.
Is 500 bbls/railcar typical?
I was just checking on that.
Federal regulations place an absolute limit of 34,500 gallons on any rail tank car. A standard “barrel” of oil is 42 US gallons, so this estimate is a bit low. There may be other considerations, and as an estimate for quick mental arithmetic it’s not bad.
500 bbls may be typical. Click the picture above to enlarge. This one is 495 bbls.
Most cars are described as “23-five’s” or capable of hauling 23,500 gallons. Depending on gravity of the oil and the interior mesurement of the car, 21,000 gallons (500 bbls) is typical. Cars and their contents are also total weight limited but I forget what this poundage is.
If the RR finds an overweight car, they will push it to a siding and start the meter for storage at a prohibitive rate.
Some of the really heavy oils, in the negative gravity range, will limit the gallons to around 20,000 or slightly less than 500 bbls. Extra light products will see as much as 21,500 gallons
There are “super-jumbo” cars now in service but their usefulness is limited to only certain routes where the roadbed is in good shape and there are no rickety bridges.
Are those the old "rail whales" that are no longer being made?
The super-jumbos are slightly taller and fatter but still about 55 feet long.
I looked up the max weight for cars;
It is 263,000 pounds. Typical tare is 70-75,000 and weight of product is 180,000-190,000.
Volume is controlled by the API gravity (weight per gallon.)
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