Updates with BNSF comment in paragraph 9.
Unreliable crude-by-rail deliveries into the US east coast could jeopardize the region's downstream renaissance, the chief executive of refiner Monroe Energy wrote in a letter to the Surface Transportation Board (STB)
Jeff Warmann's letter, dated 26 September but made public this week, said his company's 190,000 b/d refinery at Trainer, Pennsylvania, and others in the region have come to rely on onshore crude moved to the coast by trains. Monroe has a five-year deal with Bridger Energy to supply 65,000 b/d of Bakken crude railed to a terminal at nearby Eddystone, Pennsylvania, and barged to Trainer.
"The inability to ratably receive or rely on railroad service puts the future of [east coast] refineries in jeopardy," Warmann wrote, noting that Monroe came up short by more than 1mn bl of crude in August and September because of railroad issues.
"The inability of the railroad to deliver the unit trains of crude oil caused the Monroe refinery (and others relying on this railroad service) to cut refinery runs," Warmann said, specifically referring to crude-by-rail leader BNSF, which hands crude off to eastern railroads CSX and Norfolk Southern in Chicago, Illinois.
"When Bakken crude oil is unable to leave the region, barrels become stranded," Bridger chief executive Julio Rios wrote in a supporting letter earlier this month. "The ultimate consequence of the lack of robust transportation options — namely rail out of North Dakota — is wells shutting in and a significant decline in domestic production."
Both companies asked the STB to support long-term investment in railroad infrastructure.
Not everyone is so worried, though. Fellow Philadelphia-are refiner PBF Energy this week said service recently has improved.
"Some of the disruption that you are seeing involves redoing infrastructure, particularly in the Chicago area, which is slowing things down on a temporary basis," PBF Energy chairman Tom O'Malley. "I think, longer term, frankly, it is going to result in a little better operation."
BNSF has said in the past it is spending about $1bn on improvements and expansions of its system between Chicago and the Pacific Northwest. That includes $400mn in North Dakota on rail capacity that involves a second mainline track and several new sidings, existing infrastructure and new technology.
BNSF today said it works with customers "on an individual basis and we will continue to do so as we work to improve service across our network."
mgb/tdf
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