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BNSF expands Bakken oil rail transport capacity to 1M barrels per day; overcoming shortage of pipeline capacity

5 September 2012

BNSF Railway (BNSF) has increased capacity in 2012 to enable the railroad to haul one million barrels of oil per day out of the Williston Basin in North Dakota and Montana. 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. It will also benefit shippers of other commodities, including agricultural products, the company said.

One million barrels of oil per day would represent about 16-17 unit trains of 100 tanker cars each (60,000 barrels per train). (Earlier post.)

Historically, oil and gas producers have used pipelines to transport crude from production to refineries and ultimately on to end users. Because this shale development growth came about so quickly, there has been a shortage of pipeline capacity to deliver production from new unconventional sources to coastal refiners. BNSF has responded quickly to enable producers to move crude to the most attractive markets and secure the best prices.

—John Lanigan, BNSF executive vice president and chief marketing officer

Through direct and interline service, BNSF’s network reaches all major coastal and inland markets, and it directly serves 30% of US refineries in 14 states. BNSF currently has 1,000 miles of rail line in the Williston Basin area and serves eight originating terminals with two more scheduled to be completed by the end of 2012. BNSF 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.

BNSF has been hauling Bakken crude out of the Williston Basin area for over five years. In that time, we have seen the volume increase nearly 7,000 percent, from 1.3 million barrels in 2008 to 88.9 million in 2012. We see this trend continuing and we are committed to serving this growing market now and in the future.

—Dave Garin, BNSF group vice president, Industrial Products

BNSF is investing $197 million in 2012 on projects in North Dakota and Montana. Some of those projects include 2,188 miles of track surfacing, two new inspection tracks, raising track at Devil’s Lake, replacement of 121 miles of rail and about 332,000 rail ties, as well as signal upgrades and equipment acquisitions.

In addition to hiring new employees in the field, BNSF has also formed a dedicated Unit Energy Desk that works directly with our customers to help coordinate and plan unit train movements to and from the Williston Basin. With an expanded team, the Unit Energy Desk provides customers a single-source point of contact for their rail operations planning needs.

BNSF says it has also employed numerous efficiency enhancements to increase capacity on routes into and out of the Williston Basin. These include working with our customers to increase train sizes from 100 to 104 tank cars and in some cases up to 118 tank cars, adding signalization and sidings along key routes, and identifying and developing the most efficient routes.

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And some people thought it was foolish for Buffett to invest in this railroad which was already overloaded with Chinese containers from west coast ports. It shows the flexibility of the railroads. Heavier rail, more locomotives, more signals, unit trains and longer trains, and now the locomotives can easily be converted to burn LNG or CNG for a large part of their fuel to save money and use natural gas which is being flared. Since the locomotives retain the ability to used 100 percent diesel at any instant and the flow of natural gas can be put into the intake air with a simple valve controlled by a slight change in the engine computer as is already done for emergency generators to save diesel where natural gas is still available, there is little change in the locomotives. Only Russia uses LNG turbine electric locomotives, but some locomotive engines are run on CNG. New rails must now be imported to the US. Railcars that can carry CNG are easily built from arrays of high pressure pipes. ..HG..

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