By LYNN DOAN
California, home to two-thirds of refining
capacity in the western
US, brought in a record volume of waxy oil by rail from Utah
in June as crude imports from Canada and North Dakota slid.
The state, the biggest gasoline market in the US, received
2,737 bpd of oil by rail from Utah in June, almost twice the
volume of the previous month and up from nothing a year ago,
data on the state Energy Commissions website showed.
Canadian oil-by-rail imports dropped 25% to 6,669 bpd. North
Dakota shipments shrank by 34% to 4,035.
Californias oil-by-rail deliveries are at a seasonal
record as refiners in the western US, lacking direct pipeline
access, use trains to reach surging crude production from
shale formations in the center of the country and in
Canada. Utah is shipping record volumes of oil by rail as
companies use a combination of hydraulic fracturing and
horizontal drilling to draw the most waxy oil out of its
Uinta Basin since 1987.
Ultra Petroleum, a Houston-based independent oil and gas
driller that bought $650 million worth of oil-producing
assets in the Uinta Basin in northeast Utah last year, said
July 31 that rail capacity is the best option to place
By 2016, we expect to market approximately 45 percent
of our crude oil volumes via rail, Garland Shaw, the
companys chief financial officer, said in a conference
call with analysts. The company has agreements for at least
2,000 bpd of rail capacity that can expand to 7,500, he said.
Rail shipments still account for a small fraction of oil
supplies in the western US. In May, the region took 1.1
million bpd of crude from outside the US, according to data
compiled by the Energy Information Administration, the Energy
Departments statistical arm.
Demand for Uinta Basin oil may be limited by California
refiners ability to receive and process the black, waxy
oil, said David Hackett, president of energy consulting firm
Stillwater Associates in Irvine, California.
Its hard to place because of its high pour
point, he said. They dont call it black wax
for nothing. At room temperature, its a candle.
Refiners in the western US ran 2.51 million bpd of crude last
week, the highest rate in 11 months, the EIA said.