West Coast CBR shipments stable, for now

There is “big potential” to expand crude by rail shipments to West Coast ports and to California, but building the infrastructure “has proven painstakingly slow,” writes RBN Energy LLC analyst Rusty Braziel.

“CBR shipments from North Dakota to West Coast destinations peaked in January 2015 at 170,000 barrels per day, falling since then to an average 140,000 barrels per day in 2015, January through May,” Braziel says. “The vast majority of these shipments have moved to four refineries in Washington State, providing a cheaper alternative to the Alaska North Slope (ANS) crude staple these refineries have run for decades.”

In “The End of the Line: Will Bakken Shipments to the West Coast Continue?” RBN’s Sandy Fielden discusses the long-term fate of West Coast CBR.

“West Coast CBR shipments from North Dakota remain firmly routed in supplying Washington State refineries for the moment,” notes Fielden. “As such, the shipments will expand if and when Shell gets its permit, but only by 65,000 barrels a day or so. There is also a good possibility that one or more of the rail to marine port terminal projects in Oregon or Washington will eventually be built that could increase Bakken crude shipments to California. There is also likely to be a slow increase in CBR shipments to California as unload terminals there are permitted, but pipelines such as the Inland California Express may overshadow these in due course. For the moment there is no apparent end of the line for CBR shipments from North Dakota to Washington refineries.”

“Unlike the East Coast, where new pipeline infrastructure could eventually replace CBR routes, there are no current plans to build pipelines to Washington State from North Dakota,” says Fielden. “The closest such plans all involve pipelines shipping Canadian crude to the West Coast. With current CBR volumes at 140,000 barrels per day, there is not as much incentive for midstream companies to build pipelines as there is for the 400,000 barrels per day-plus East Coast CBR market. There are plans to build out pipelines from Texas to Southern California that we have described previously, including the Kinder Morgan Freedom pipeline project, which is still on the drawing board but appears to be gathering dust, and the Questar/Spectra Inland California Express pipeline, which is proceeding slowly and not expected online until 2017 at the earliest. Neither of these pipelines is designed to ship Bakken crude to the West Coast. They would both likely ship West Texas Intermediate and its sister crude West Texas Sour from the Permian Basin to California.”

Click HERE to access Fielden’s full analysis.