US Gulf rail car deliveries could ease east-coast oil woes

19 March 2013 20:54  [Source: ICIS news]

SAN ANTONIO (ICIS)--Developments in US oil and gas production are having a profound effect on the competitive economics of various segments of the US refining industry and its ability to compete in a global market, an industry analyst said on Tuesday.

Although plans are in the works to build or expand pipelines to allow more crude oil to flow from Cushing, Oklahoma, to US Gulf coast refineries, new production is coming on stream faster than the pipeline take-away capacity is increasing, said Charles Kemp of Baker & O’Brien during the American Fuel & Petrochemical Manufacturers (AFPM) annual meeting.

Kemp said that since the pipeline bottlenecks emerged in Cushing, some refining centers are building unit train unloading facilities to receive low-priced Bakken or Canadian crude by rail car.

Over the next few years, Kemp said a substantial portion of east-coast sweet-crude imports will be displaced by these rail deliveries and, possibly, by waterborne deliveries of certain Gulf coast crudes.

The rail car deliveries may be the answer to many of the east-coast refinery woes, which have caused the shutdown of several refineries.

However, according to Kemp, this method’s survival depends heavily on the sustainable production rate of the new tight oil plays in the Bakken and Utica formations.

The AFPM annual meeting runs through Tuesday.

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By: Anna Matherne

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