Western Railroad Discussion > Another nail in Bakken crude by rail?

Enbridge and Marathon Oil have agreed to purchase a substantial stake in the nearly operational pipeline carrying oil from the Bakken region of North Dakota to Illinois.  Combined with the Southern Access pipeline and its connections, this will allow crude to flow by pipe from North Dakota to the US Gulf region.  The move has been long expected.

The decline in railed crude has been sharp, as some observers believe the pipes may reduce transfer costs by 2/3 to the shipper when compared with rail. In the early days of the frac boom, rail was the only way to get crude out to the east coast, or to the Gulf.


Buying a stake

 

Lackawanna484 Wrote:
-------------------------------------------------------
> Enbridge and Marathon Oil have agreed to purchase
> a substantial stake in the nearly operational
> pipeline carrying oil from the Bakken region of
> North Dakota to Illinois.  Combined with the
> Southern Access pipeline and its connections, this
> will allow crude to flow by pipe from North Dakota
> to the US Gulf region.  The move has been long
> expected.
>
> The decline in railed crude has been sharp, as
> some observers believe the pipes may reduce
> transfer costs by 2/3 to the shipper when compared
> with rail. In the early days of the frac boom,
> rail was the only way to get crude out to the east
> coast, or to the Gulf.
>
>
> Buying a stake
>
>  
"Nearly complete?"  Since this pipeline, the subject of a great deal of 
controversy in Iowa, just got approval to buld in Iowa, I find that an odd
assertion to say the least!  It should be noted a couple of construction
sites were victims of arson type vandalisim recently, last 48 hours.  I
sincerely doubt this line will be completed this year.  

Nick Tharalson,
Marion, IA

The press release and SEC filing both say the pipe will be operational this year.  I'll look into what's going on.

All is proceeding as expected.

ntharalson Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > Enbridge and Marathon Oil have agreed to
> purchase
> > a substantial stake in the nearly operational
> > pipeline carrying oil from the Bakken region of
> > North Dakota to Illinois.  Combined with the
> > Southern Access pipeline and its connections,
> this
> > will allow crude to flow by pipe from North
> Dakota
> > to the US Gulf region.  The move has been long
> > expected.
> >
> > The decline in railed crude has been sharp, as
> > some observers believe the pipes may reduce
> > transfer costs by 2/3 to the shipper when
> compared
> > with rail. In the early days of the frac boom,
> > rail was the only way to get crude out to the
> east
> > coast, or to the Gulf.
> >
> >
> > Buying a stake
> >
> >  
> "Nearly complete?"  Since this pipeline, the
> subject of a great deal of 
> controversy in Iowa, just got approval to buld in
> Iowa, I find that an odd
> assertion to say the least!  It should be noted a
> couple of construction
> sites were victims of arson type vandalisim
> recently, last 48 hours.  I
> sincerely doubt this line will be completed this
> year.  
>
> Nick Tharalson,
> Marion, IA

Nick,

You should venture over to the areas in Iowa where the pipeline runs. The construction is at feviorish pace now and with the delays in permitting they have a lot of additional resources in play now. Local news (Boone/Ames) just had an article about all the campgrounds filling up with out of state workers. So much for the jobs the pipeline will bring. 

Interesting time for the Hydrocarbon business.

It's been said that the Pipleines clean up the crude oil to prevent corrosion in the pipeline itself. One of the spectacular downsides of Bakken crude is all the unwanted sulpher and other byproducts in the crude, there's a descriptive phrase for it that I don't have right now. Had the Bakken Crude been cleaned up before the past few events maybe things would have played out differently.

It appears that there is some aggressive buying up of smaller companies by big companies and some sort of push to squeeze out the working wells and leave the discovered but not tapped crude in the ground. That may be evidenced by the numerous 'fracking sand' unit trains moving around Wyoming.

What capacity investments has BNSF made to move crude oil ?
Will these investments still have a payoff with more crude moving by pipeline ?   Thanks.

Following the Lac Megantic explosion, North Dakota imposed stiff rules on removing the high levels of volatile elements found in some Bakken crude. Prior to the explosion, Enbridge received a waiver on common carrier status to refuse high volatility crude. The rails chose not to seek a similar waiver.

For all practical purposes, any crude leaving ND has been minimally processed to lower the volatility / flash point.  But it's still a lot more volatile than your typical Permian or Wolfcamp juice.

BNSF and UPrr have been making huge capacity improvements to move containers, unit trains and anything that will reduce touch labor.  The 'return' will be positive but will never be enough for investors. In the mean time they're trashing out their operating employees, sounds like a pretty crappy job these days with a marginal career outlook at best.

Another lawsuit was just filed to stop the pipeline - this time by a North Dakota Indian tribe

http://www.grandforksherald.com/news/region/4083858-standing-rock-tribe-sues-over-dakota-access-pipeline-permits