Advertisement

Rail fading from North Dakota oil transit

No. 2 shale oil state adding more pipeline capacity.

By Daniel J. Graeber
Rail fading from North Dakota oil transit
State data from North Dakota show rail transport of crude oil falling back after peaking in December 2014. Graph courtesy of the North Dakota Pipeline Authority

BISMARCK, N.D., Aug. 18 (UPI) -- New pipelines operating in North Dakota have pushed the volume of crude oil by rail lower during the first half of the year, a state official said.

Rail broke away from pipelines as the main source of crude oil delivery in 2012. The boom in shale oil production from the so-called Williston basin, hosting the Bakken and Three Forks shale formations, had outpaced pipeline capacity, leaving companies with rail as the primary alternative transit option.

Advertisement

After peaking in December 2014, when the state set its crude oil production record at 1.22 million barrels per day, transport by rail has been in a general decline and is now at parity with pipeline transport.

Justin Kringstad, director of the North Dakota Pipeline Authority, said in response to email questions the decline in rail volumes was in part because of the February start of the Double H pipeline, a project led by pipeline company Kinder Morgan. That project has the capacity to deliver as much as 84,000 barrels of oil per day.

RELATED Bearish Asia drags on crude oil prices

"My estimates are showing a decrease in crude by rail for the first half of 2015," he said.

Advertisement

There has been a corresponding increase in the number of rail incidents involving crude oil shipments as production increases in the United States. Rail company BNSF reported in May that six of the 107 cars carrying Bakken crude oil through Heimdal, N.D., caught fire after derailing.

U.S. regulators in early 2013 started an operation dubbed Bakken Blitz to examine how shippers are classifying crude oils that may be more prone to detonate in some types of rail tankers. Bakken oil, a grade found in North Dakota, was found to be potentially more flammable than other types of oil, though industry supporters questioned those findings.

RELATED London opening oil and gas doors

North Dakota Gov. Jack Dalrymple said that incident was further evidence of the need for expanded pipeline capacity through his state.

"I will say with certainty that the state of North Dakota has been very supportive of developing new pipeline projects in order to move growing levels of production by pipeline as the Bakken play continues to mature," Kringstad said.

Latest Headlines

Advertisement
Advertisement

Follow Us

Advertisement