Posted on 12/13/2013 5:20:01 AM PST by thackney
The percentage of North Dakota oil shipped by rail will likely jump significantly in the next year as producers increasingly turn to trains to reach U.S. refineries where premium prices are fetched, the state’s top oil regulator told lawmakers Thursday.
Lynn Helms, director of the Department of Mineral Resources, told the Legislature’s Government Finance Committee that he expects as much as 90 percent of the state’s crude will move by rail in 2014, up from about 60 percent at present.
North Dakota, the nation’s No. 2 oil producer behind Texas, is on pace to surpass 1 million barrels daily early in 2014, Helms has said.
North Dakota oil prices have been slipping since July, from about $96 a barrel to an average this month of $73.50. The benchmark price for light sweet crude is set in Cushing, Okla. Oil from North Dakota and Texas is “flooding” that major crude hub where most U.S. shipments are sent, Helms said.
Crude shipped by rail to East, West and Gulf Coast refineries can fetch up to $30 more per barrel than the benchmark set at Cushing, Helms said.
(Excerpt) Read more at fuelfix.com ...
The cost is typically double ($6 vs $12, greatly depending on distance) but the rail can reach places that have little pipeline access and because of that pay up to $24 more.
Top regulator says 90 percent of ND oil could move by rail next year
http://www.inforum.com/event/article/id/420995/group/News/
December 12, 2013
North Dakota’s top oil regulator said railcars could move up to 90 percent of the oil produced in the state next year as differences in crude prices make rail more lucrative for operators than shipping by pipeline.
“We’re expecting 2014 to be soft in the crude price scenario, and so railcars are going to be absolutely vital to what we do in North Dakota,” Lynn Helms, director of the state Department of Mineral Resources, said Thursday.
North Dakota is the nation’s No. 2 oil-producing state behind Texas, with total daily output projected to top 1 million barrels by early next year.
Railcars carried about 63 percent of the state’s oil production in September, the most recent month for which figures were available, said Justin Kringstad, director of the North Dakota Pipeline Authority.
Meanwhile, the price for a barrel of Bakken sweet light crude fell from about $96 in July to $73.50 this month, Helms said. At that price, it’s still “extremely economical” to drill in North Dakota’s four core oil-producing counties – Dunn, Mountrail, McKenzie and Williams – as well as in Stark and Divide counties, but not in Oil Patch fringe counties, he told the Legislature’s interim Government Finance Committee.
North Dakota ‘s oil industry has seen an “enormous shift” from pipeline to railcar in the last three to four months as the gap has widened between the world oil price and the U.S. benchmark price and between the U.S. price and the Bakken sweet crude price, Helms said.
Shipping by railcar to specific markets is netting operators $24 per barrel more than moving it by pipeline, which is helping the state meet its revenue forecast from oil taxes, Helms said. He said one operator that was transporting 75 percent of its oil by pipeline to Minnesota and Wyoming in July is now moving 95 percent by railcar to refineries in Philadelphia and St. James Parish, La.
Probably why my shares of BRKB have gone up thanks to Burlington Northern Santa Fe railroad.
Owners of tank cars are seeing $$$ !
Viva North Dakota!!
Remember when you told me how stupid I was for suggesting they build the Keystone to ND and wait.
Where does the pipeline end currently?
The Keystone XL is sized 830,000 barrels per day.
FERC regulated common carrier pipelines crossing state lines do not have the option to just build and see who comes. They are required to have an open season and show commitments from companies to move oil in that location.
I should have clarified:
Brown, Green and Orange portions are already built and in service.
The Orange, The Gulf Coast Pipeline, just went into service this week and is still filling with oil.
I can’ to wait for the U.S. To become energy independent. The price of a gallon of gas will really drop. HA,HA- sorry I didn’t mean to make myself laugh.
No, but at least then we will fund more of our own economy and less of our enemies.
Some folks just don't understand oil is priced for the global market. But more of it being produced here in the U.S. should lower the price a bit. And if OPEC starts flooding the market (as they have done before) to bring the price down below our recovery costs it'll really go down. In any scenario....DRILL BABY DRILL!!!
Doesn’t Obama’s buddy Warren Buffett own the Burlington Northern Santa Fe?
They’re offering a two for one sale at the local Conoco...
Most of our stations are 1 for 3.
Yes.
Buffett’s Burlington Northern Among Pipeline Winners
http://www.bloomberg.com/news/2012-01-23/buffett-s-burlington-northern-among-winners-in-obama-rejection-of-pipeline.html
Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada Corp. (TRP)’s Keystone XL oil pipeline permit.
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and he profits from:
Warren Buffett Cashes In on Railroad Tank Cars
http://www.businessweek.com/articles/2013-11-14/2014-outlook-warren-buffett-cashes-in-on-railroad-tank-cars
At the companies that make and lease rail cars, business is so good that they can’t make them fast enough. In the third quarter of this year, Trinity Industries (TRN), the nation’s biggest rail car manufacturer, reported record quarterly earnings per share, a 58 percent increase from a year earlier. It received orders for 5,610 cars in the quarter, bringing its backlog of orders for all rail cars to 40,050, a value of $5.1 billion. Its competitor, American Railcar Industries (ARII), also reported surging revenue and a growing backlog.
” American Railcar Industries (ARII), also reported surging revenue and a growing backlog”
Made a decent 30% return on ARII in 4 months. Sold at the recent high of $47 and change. Surprisingly they received some Analyst downgrades which brought the price back down to $42 or so. Carl Icahn is now a major holder, not sure if that is good or bad.
thnks
yr wlcm
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