Crude oil from the Bakken Shale will be Delaware-bound under an agreement between leading Bakken producer Continental Resources Inc. and PBF Energy Inc. Crude is to be delivered by rail to PBF's double-loop track at its refinery in Delaware City.
Continental has supply arrangements with refiners on the West Coast, the Gulf Coast and now the East Coast, the companies said Wednesday.
"This unique transaction illustrates the emerging shift in the light sweet crude market," said Continental President Rick Bott. "In addition to diversifying Continental's customer base and streamlining our value chain, it allows us to deliver unblended premium Bakken crude to the East Coast -- a market that has historically been driven by imports of foreign oil."
PBF CEO Tom Nimbley said the company has been investing in rail cars and developing its East Coast rail infrastructure to increase access to cost-advantaged North American crude.
"Delaware City's heavy and light crude rail discharge facilities allow us to work directly with producers in Canada and the Midcontinent, like Continental Resources, and provide us with a competitive advantage versus Northeast refiners that rely on third parties to deliver North American crude oil," Nimbley said.
North Dakota Department of Mineral Resources Director Lynn Helms said late last year that a majority of the state's oil production was leaving by rail for the East and West coasts and the Gulf of Mexico (see Shale Daily, Dec. 18, 2012).
PBF recently opened an office in Oklahoma City, which along with its Calgary office will focus on sourcing North American crude oils and feedstocks for the company's refineries.
Continental increased its position in the Bakken to 1.14 million net acres as of the end of 2012, a 24% increase from year-end 2011. The company participated in completing 135 gross (51 net) operated and nonoperated wells in the Bakken during the fourth quarter and plans to do the same for 558 gross (226 net) wells in the Bakken in 2013 (see Shale Daily, March 4).