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BNSF now can move 1mn b/d of Bakken by rail

4 Sep 2012, 9.37 pm GMT

Houston, 4 September (Argus) — BNSF Railway said it has increased capacity this year to haul 1mn b/d out of the Williston basin in Montana and North Dakota.

“This increased capacity will allow the energy industry to continue the record expansion of oil production in the Williston Basin and to ship the new production to markets throughout the US,” the company said today. BNSF's crude volumes out of the region have jumped nearly 7,000pc in the past five years, rising from 1.3mn bl in 2008 to 88.9mn this year.

The Williston basin is home to the prolific Bakken formation, the top US crude-producing shale. The use of rail to move crude out of the region has surged as drilling boomed and infrastructure constraints pushed local prices down and incentivized producers to sell their crude for much higher prices on the coasts. Production has also surged: North Dakota's crude production in June was 660,322 b/d, 71pc higher on the year. The North Dakota Pipeline Authority estimates that rail transported 39pc of Williston basin crude in May and around 330,000 b/d of crude in June.

Refineries on the US Gulf, east and west coasts have looked to take more price-advantaged crude by rail, and receiving terminals have been built or announced across the US. Statoil last week said it would begin railing crude out of the Bakken via a long-term lease on over 1,000 new railcars.

BNSF, a major rail player in the Bakken said it now serves 30pc of US refineries in 14 states. It has 1,000 miles of rail line in the Williston basin area and serves eight originating terminals with two more scheduled to come online by the end of this year. The railway said it connects to 16 of the top 19 oil-producing counties in central and western North Dakota and five of the six oil producing counties in eastern Montana.

The company is investing $197mn this year on rail improvements and expansions in North Dakota and Montana and said it has hired more than 560 new employees. It is also emphasizing the coordination of unit train movements, which consist of entire train shipments of crude. BNSF said it has worked with customers to increase train sizes from 100 to 104 and sometimes up to 118 tank cars.

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