U.S. crude-by-rail projects; Valero starts up Louisiana rail project
HOUSTON, March 27 (Reuters) - U.S. oil producers, refiners and logistics companies are deep into the crude-by-rail movement with dozens of projects throughout the United States and crude movements via rail that jumped 71 percent in 2013 compared to the prior year.
Rapid proliferation of oil-by-train shipments started more than three years ago to get oil to markets as pipeline infrastructure lagged booming U.S. and Canadian crude production. The Association of American Railroads said on Thursday that 797,434 barrels per day moved by rail in 2013, more than 10 percent of average U.S. output of 7.5 million bpd last year. Crude movements were higher than expected, reaching a 74 percent jump from 457,151 bpd in 2012. AAR had anticipated a 71 percent jump to 782,465 barrels per day last year.
The East and West coasts, in particular, turned to rail to tap cheaper U.S. and Canadian crude with no major oil pipelines in operation, or even planned, to move inland crude to those markets.
Demand for light-sweet North Dakota Bakken crude is waning along the U.S. Gulf Coast as more pipeline projects start up, moving light crude to the market from Texas and Oklahoma. However, demand remains high for heavy Canadian crude at Gulf Coast refineries configured to run it.
Valero Energy Corp this month started up its new offloading facility at its 205,000 barrels-per-day (bpd) St. Charles refinery in Norco, Louisiana, to take up to 20,000 bpd of Canadian crude. The company is seeking a permit to expand offloading capacity to 30,000 bpd.
Rail has evolved past a stopgap measure into an integral crude sourcing mode for refiners, adding flexibility to choose the best-priced crude from various shale and tight oil plays. Contracts are shorter, and they are not completely locked into specific types of crude moved from fixed points via pipeline.
Here is a rundown of about 90 U.S. rail projects - both loading at production sites and unloading at refineries and terminals - that have emerged as U.S. shale and Canadian production grows: