Rail expansion planned for U.S. oil boom

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HOUSTON, Sept. 5 (UPI) -- A U.S. freight carrier said it was expanding its rail network in the Great Plains to accommodate the development of the regional oil sector.

BNSF Railway, which operates 32,000 route miles of rail in the United States and Canada, said it was investing $197 million in rail expansion in North Dakota and Montana. The expansion would allow the railroad to transport 1 million barrels of crude oil per day from the region.

The company said that typically, oil and natural gas producers use pipelines to deliver petroleum products to refineries. Because the region developed so quickly, however, there is a shortage of pipeline capacity.

Dave Garin, vice president for industrial products at BNSF, said the company's rail delivery from the region has increased from 1.3 million barrels in 2008 to more than 88 million this year.

"We see this trend continuing and we are committed to serving this growing market now and in the future," he said in a statement.

Norwegian energy company Statoil said last week it would use rail, not pipelines, to deliver oil from its operations in the Bakken and Three Forks oil plays in North Dakota.

The Association of American Railroads said deliveries of crude oil and petroleum products by rail increased from 174,000 cars during the first six months of 2011 to 241,000 cars during the same period this year.