North Dakota crude-by-rail shipments to have 'minor delays': Continental

Houston (Platts)--2Jan2014/151 pm EST/1851 GMT


Major Bakken Shale oil producer Continental Resources said Thursday that there will likely be "minor delays" of eastward rail shipments from North Dakota following Monday's derailment of a BNSF Railway crude-carrying train.

"We're looking at the likelihood of minor delays at least into early next week, as the rail companies re-route eastward shipments around the accident," spokesman J. Warren Henry said Thursday in an email. "There's no effect on westbound or southbound shipments, or pipe."

Production has not been affected, Henry said.

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Bakken market participants said Thursday that the rail incident has had no impact on prices, but the Bakken-Blend ex-Clearbrook differential has gained $6/b since Tuesday. It was heard traded Thursday at West Texas Intermediate Calendar Month Average minus $3/b. The price jump was attributed to an increase in trading following the holidays.

BNSF Railway said early Thursday that the two main Casselton, North Dakota, rail tracks resumed operations at 3:00 am CST (0900 GMT) and 3:15 am CST.

The derailment of the unit train, which was presumably carrying Bakken crude, took place Monday afternoon just west of Casselton, 25 miles west of Fargo, North Dakota. The train was traveling eastbound.

The oil train originated in Fryburg, North Dakota, and was headed to Hayti, Missouri, according to US National Transportation Safety Board.

On Thursday, sources speculated on the derailed oil's origin and destination, saying that logistics company Marquis Terminals may have been involved in the crude's transportation.

In Hayti, Marquis owns a crude-by-rail unloading terminal that handles seven unit trains a week, according to its website. The terminal is "BNSF Direct," it said. From there, the unloaded crude is transferred onto barges and sent to refining centers along the Mississippi River.

A Marquis official was not immediately available for comment.

From the terminal in Hayti, the oil could move to Memphis, Tennessee, another Bakken trader said. He noted that the crude had likely originated at the Great Northern terminal in Fryberg.

Memphis is home to Valero Energy's 180,000 b/d refinery. Like other US refiners, Valero has increasingly shifted its crude slate to run more of the , relatively cheap, light sweet Bakken crude. The refiner has said that it runs Bakken crude at Memphis, and sends 100,000 b/d of crude from St. James, Louisiana, via the Capline Pipeline.

On Thursday, Valero spokesman Bill Day said that the "cargo of crude was not headed to Memphis or any of our other plants. ... I don't have any info on whose it was."

The shipment of crude was also not destined for Delta Air Lines' 185,000 b/d Trainer, Pennsylvania, refinery, said a source familiar with refinery operations who declined to be named.

"Our Atlanta commercial group is working with all the railroads and has been told there are no issues at all," he said.

During Delta's investor day on December 11, 2013, President Ed Bastian said Monroe Energy has contracts to supply the refinery with about 70,000 b/d of domestic crude, mostly coming from the Bakken.

--Bridget Hunsucker, bridget.hunsucker@platts.com
--Gary Gentile, gary.gentile@platts.com
--Janet McGurty, janet.mcgurty@platts.com
--Jacqueline Puig, jacqueline.puig@platts.com
--Josh Brown, joshua.brown1@platts.com
--Esa Ramasamy, esa.ramasamy@platts.com
--Edited by Derek Sands, derek.sands@platts.com

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