Enbridge Inc. unit Enbridge Rail (Philadelphia) LLC and Canopy Prospecting Inc. have formed the Eddystone Rail Co. to develop a unit-train facility and related pipeline infrastructure near Philadelphia, PA, to deliver Bakken and other light sweet crude oil to Philadelphia area refineries.
The project is expected to handle 80,000 b/d in the third quarter 2013 and could ultimately be expanded to receive up to 160,000 b/d for subsequent transport by barge or pipeline to nearby refineries as early as mid-2014, Enbridge said.
Enbridge is to own 75% of the joint venture (JV) and serve as operator of the facility. The total estimated capital cost of the project is $68 million, including interest during construction.
The project includes leasing portions of Exelon Generation’s Eddystone power plant site and reconfiguring existing track to accommodate 120 car unit-trains, installing crude offloading equipment, refurbishing an existing 200,000 bbl tank and upgrading an existing barge loading facility. Additional storage and pipelines connecting Eddystone to Philadelphia area refineries are under development, Enbridge said.
“The Eddystone Rail Co. will be the largest unit-train facility able to receive North Dakota Bakken and other light sweet crudes directly into Philadelphia area refineries” said Canopy President Jack Galloway. “At nearly one million b/d, the region is second only to Houston in the concentration of light sweet refining capacity. Eddystone will be the first to provide access directly to those refineries from a rail facility.”
In early 2013 Enbridge’s Bakken Expansion Program is expected to add 200,000 b/d of export pipeline capacity from the Bakken Shale — 80,000 b/d into Berthold and 120,000 b/d into Cromer, Manitoba — taking Enbridge’s total capacity from North Dakota to 475,000 b/d.
“Rail is the fastest way to provide increased export capacity out of the Bakken, creating a near-term solution to transportation bottlenecks and the resulting crude oil pricing differentials,” said Stephen J. Wuori, president of Enbridge’s liquids pipelines business. “Eddystone is an important step in our longer-term strategy to accommodate the anticipated growth of light crude oil supply and to provide Bakken producers and PADD I refiners cost-effective capacity to premium markets on the eastern side of North America.”
During an October presentation to financial analysts, Wuori talked about how shippers are fickle when basis differentials collapse. Wuori allowed that numerous crude terminaling projects have been announced or completed. But when basis collapses — or a cheaper transport alternative emerges — capacity goes unused.
“Differentials have to remain high and be seen to be remaining high in order for rail to continue to be viable,” he said. “No one is building new track. You hear a lot about loading facilities and unloading facilities and rail cars being welded together, but nobody’s building much for new track…” he said (see Shale Daily, Oct. 5).
Meanwhile, rail transport of Bakken oil continues to grow, and transporters are investing in new facilities on a pace with pipeline takeaway growth, according to statistics from the North Dakota Department of Mineral Resources (see Shale Daily, Nov. 2).
There were 208 rigs active in the Bakken/Sanish/Three Forks last week, up from 182 last year, according to Smith Bits data. Whiting O&G operated the largest number (21) of those rigs, followed by Continental Resources (20), Statoil (Brigham) (18), Hess (15) and Petro Hunt (11).
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