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Phillips 66 to send Bakken oil by rail

Jan. 9, 2013 at 9:59 AM

HOUSTON, Jan. 9 (UPI) -- U.S. refiner Phillips 66 announced it signed a five-year agreement to deliver crude oil from the Bakken play in North Dakota to a New Jersey refinery by rail.

Phillips said it signed a deal with crude transportation company Global Partners, which would use its rail transportation system to deliver crude oil from North Dakota to the Phillips' Bayway refinery in New Jersey.

Tim Taylor, executive vice president of marketing for Phillips, said Global's rail system is a "virtual pipeline" for Bakken crude oil transportation.

"Our five-year agreement with Global assures us long-term access to advantaged crude for our Bayway refinery through what we believe is a cost competitive origin-to-destination supply system to the East Coast," he said in a statement.

Phillips, under terms of the take-or-pay commitment, will receive 91 million barrels of crude oil over the life of the contract.

Production from the Bakken pay has outgrown regional pipeline capacity, leading energy companies to look to rail for crude oil deliveries. The Association of American Railroads said shipment of petroleum products by rail increased 46.3 percent last year when compared to 2011 carloads.

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