In the space of just over one year North Dakota crude rail takeaway capacity has reached close to 1 MMBb/d. According to the North Dakota Pipeline Authority 58 percent of October 2012 Williston Basin production of over 800 Mb/d was transported out of North Dakota by rail. There are now 18 crude loading terminals operating in North Dakota on the BNSF and Canadian Pacific (CP) railroads. Today we continue our series on crude by rail with a North Dakota terminal inventory.

The first episode in this series provided an introduction and overview of the “Year of the Tank Car” (see Crude Loves Rocking Rail ). We described the rapid growth in US crude oil production that pressured pipeline logistics and made rail a viable alternative for taking crude to market. We also described the growth of crude by rail traffic in 2012 and the impact on railroads and tank car manufacturers. This second installment in our series begins a detailed survey of rail loading terminals with a look at North Dakota.

Crude oil production from the prolific Bakken formation in North Dakota rose by 200 Mb/d in 2012 from 500 Mb/d to over 700 Mb/d. In the Williston basin as a whole that includes South Dakota and Montana production was over 800 Mb/d in October 2012. If the current rates of growth continue then crude production in the Bakken will reach 1 MMb/d by the end of 2013. The biggest challenge for land locked North Dakota producers is getting all that crude to market. Limited pipeline takeaway capacity in the region is full and Bakken producers compete for space on those pipelines with barrels coming into the Midwest from Western Canada. Rising volumes of production crude making their way into the Midwest quickly exceeded refinery demand towards the end of 2011 and into 2012 leading to record inventory builds at the Cushing, OK hub. Pipeline projects to transport crude from the Midwest to the larger refining centers on the Gulf Coast were on the drawing board but not being built fast enough. As a result Bakken producers faced heavy discounts for their crude versus the benchmark West Texas Intermediate (WTI) at Cushing. WTI prices in turn were discounted against crude prices set by the international market at coastal locations.