Shipping oil by train

Oct 2, 2012

Much of Bakken crude oil from western North Dakota is leaving the state via rail.

State mineral resources director Lynn Helms says 47 percent of Bakken crude is shipped by rail, compared with 43 percent by pipeline – and ten percent by truck. Helms says the reason is financial.

"It allows us to displace foreign crude oil that would come in from the North Sea of the Pacific Rim into the East or West Coast," said Helms. "The pipelines only get us to Cushing, Oklahoma, or once the Keystone XL pipeline is in place, to the Gulf Coast."

Helms says Delta Air Lines bought a refinery in Pennsylvania, and it plans to use Bakken crude for airplane fuel – and that will be shipped in via rail.

Meanwhile, Helms says for years, oil from the Bakken formation was discounted – because of the costs of getting the oil to market. But that discount is starting to disappear.

"The connection between Cushing and the Texas refineries is now very close to completion," Helms said. "Major pipelines that used to move crude oil from the Gulf of Mexico into Cushing are being reversed, and should be on line before the end of the year."

Helms said the glut of oil at Cushing will disappear, meaning Bakken price will match the Texas Intermediate price.