By LYNN DOAN and DAN MURTAUGH
California, the third-largest oil-refining
state in the US, is
bringing in a record volume of oil from Canada by rail as it
faces shrinking supplies from Alaska and within the state.
The most populous US state received 709,014 bbl of crude from
Canada by rail in December, a 4.9% increase from November and
up from zero a year ago, data posted on the state Energy
Commissions website show.
Canada made up 67% of the states total oil-by-rail
receipts. North Dakota, where fields in the Bakken formation
are producing a record volume of crude, shrank to a 5.9%
US West Coast refiners from Valero Energy to Tesoro, lacking
pipeline access to the glut of shale oil in the middle of the
country, have been turning to rail to counter declining
supplies in California and Alaska. California brought in a
record 2.83 million bbl of oil by rail in the fourth quarter
from all sources, almost double the amount from the three
months prior, the state said.
Were seeing a lot of Canadian crude-by-rail
coming online, so
its no surprise its beginning to show up in
California, said David Hackett, president of energy
consulting firm Stillwater Associates in Irvine, California.
California is oriented toward heavy or medium, sour crude,
and the Canadian barrels, which are heavy and somewhat sour,
are a better fit than the light Bakken barrels.
Alaska North Slope crude, which made up 12% of
Californias oil slate in 2012, has traded an average
$27.73/bbl above Western Canadian Select, a heavy sour blend,
over the past month, data compiled by Bloomberg
show. Bakken oil has traded $16.09/bbl above Western
The discounts have been pretty big, an indication of
how constrained the pipelines are up in Canada, said
Gordon Schremp, a fuels analyst at the state Energy
Commission. Im not surprised to see more Canadian
come in. Wait until some of these rail project
s get built here. The
economics will be even better than what were seeing
Oil-by-rail receipts from Wyoming totaled 221,793 bbl in
December, making up the second-largest share of the
states volume at 21%. North Dakota sent 62,325 bbl and
New Mexico 12,927.
Alaskan oil output has declined every year since 2002 as the
yield from existing wells shrinks. Alaska North Slope crude
production averaged 567,600 bpd in December, down from
582,150 a year earlier, data posted on the Alaska Department
of Revenues website showed.