With low oil prices and producers slashing the rig count in the Bakken shale, it is fair to ask whether crude-by-rail will be able to compete with pipelines in the region. The bottom line is that crude-by-rail is likely to continue playing a vital role in carrying large amounts of crude—more than 700 thousand barrels per day (kbd) or roughly 10 unit trains’ worth per day—out of the Bakken area.
Aggregating the existing crude-by-rail loading facilities and export pipelines in the Bakken area indicates that there are currently approximately 1,360 kbd of rail and 750 kbd of pipeline takeaway capacity (Exhibit 1). Rail capacity could rise to 1,500 kbd over the next three years, primarily from expansion of existing facilities, while pipeline capacity could increase to 1,300 kbd by year-end 2018. In short, the vast majority of potential outbound rail capacity is already “baked in” and pipelines are where capacity could grow sharply if planned projects come through. Continue Reading