Bakken oil shipping to get boost from rail terminal

Wed Sep 7, 2011 9:02pm GMT
 

* Lario adding 100,000 bpd terminal this month

* Lario teamed with oil shipper, Wyoming-based True Cos.

* Facility boosts Bakken crude-by-rail capacity by 75 pct

* Terminal could later expand to 250,000 bpd-Executive

By Joshua Schneyer

NEW YORK, Sept 7 (Reuters) - Kansas-based Lario Logistics said it will open a 100,000 barrel-per-day crude-by-rail terminal in North Dakota's Bakken Shale oil area this month, a move that will boost the region's capacity to ship crude on railways by about 75 percent.

Lario's terminal, known as the Bakken Oil Express (BOE) and located near Dickinson, North Dakota, will serve oil shippers including the Wyoming-based True Companies, which hold oil and gas stakes in several North American regions, BOE managing director Steve Magness said in an interview on Wednesday.

"As production grows, rail is a medium and even long-term solution to get crude out of the area," Magness said.

North Dakota oil production has tripled in four years, reaching 380,000 bpd in June.

Crude-by rail terminals have emerged to ship oil to regions with greater refining capacity, including Cushing, Oklahoma, or as far south as St. James, Louisiana, the site of two other crude-by-rail terminals.

Logistics industry sources say that a quarter of Bakken's oil production already moves by rail, and they put current loading capacity in the region around 130,000 bpd.

Oil loaded at the BOE can be sent to several other market regions, Magness added. He declined to discuss where True or other shippers, who may use the terminal, would send the crude.

A True executive was not immediately reachable for comment.

The first unit train -- a configuration of some 100 railcars that can carry almost 70,000 barrels of oil -- is expected to depart BOE by October 1.

Current terminal operators in the Bakken area include a unit train facility controlled by EOG Resources

On the Gulf Coast, terminals are expanding to handle more rail shipments of crude from Bakken. The growth has been driven in part by premiums of up to $30 a barrel for Gulf Coast region crudes versus crude for delivery in landlocked Cushing.

By October, US Development Group is planning to double the daily receiving capacity of its St. James terminal to 130,000 bpd, or two unit trains, from 65,000 bpd now. The terminal has been receiving increasing volumes of Bakken crude.

Lario's facility in the Bakken could quickly be expanded to load as much as 250,000 bpd on high shipper demand, Magness said.

An additional 370,000 bpd of crude-by-rail loading capacity in the Bakken region is planned by several other companies before the end of 2012.

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