Monday, July 20, 2015

Falling oil prices and an increase in pipeline use easing rail delays for crops

Falling oil prices and a new pipeline have decreased rail delays of crops across the Upper Midwest, James MacPherson reports for The Associated Press. Justin Kringstad, director of the North Dakota Pipeline Authority, "said two things have helped displace oil traffic in recent months: a new 84,000-barrel-per-day pipeline that went into service in February and a more than $425 million refinery in western North Dakota that late last month began converting about 20,000 barrels of crude daily into diesel and other products, most of which remains in the state. Combined, those displace roughly 1½ oil trains daily or about 45 a month."

"Though the state produced 1.2 million barrels of crude per day in May, down slightly from the record set in December, the breakneck pace that elevated it to No. 2 behind Texas has decelerated with slumping oil prices slowing rig activity and lessening the need for freight shipments to support drilling," MacPherson writes. "State data shows 73 rigs drilling on Tuesday, down from 193 on the same day a year ago."

Producers have been trying to move crude oil off the rails for years, said Ron Ness, president of the North Dakota Petroleum Council. He told MacPherson, "Producers want to get those barrels on pipelines. Oil wants to move to the pipelines. Getting it off the rails opens the rails for other commodities as well." (Read more)

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