Crude by rail continues to grow alongside production in the Rocky Mountains
As crude oil production in the Rocky Mountains, Petroleum Administration for Defense District (PADD) 4, has steadily increased, so too has the use of railways to transport crude oil from the region. Data from the Energy Information Administration shows that 122 MBOPD of crude oil was moved by rail from PADD 4 in April 2015, accounting for 19% of total crude shipments from the region.
In 2010, just 359 BOPD was shipped by rail from PADD 4 to the Gulf Coast (PADD 3). In April, the number of barrels shipped from PADD 4 by rail had not only increased by a factor of nearly 340, the crude being shipped was reaching destinations in every PADD across the U.S.
Pipelines from PADD 4, by contrast, only move crude oil from the Rocky Mountain region to the Midwest and Gulf Coast (PADDs 2 and 3), although in much larger quantities. Pipeline shipments from PADD 4 averaged 429 MBOPD in the first four months of the year, up from 184.6 MBOPD in 2010, according to the EIA.
Despite the rise in the amount of crude oil shipped by rail from PADD 4 since 2010, the EIA anticipates that future growth may be limited. Several pipeline projects are in progress that will increase the capacity of crude that could be shipped by pipeline from PADD 4, reducing the need for greater rail capacity.
SemGroup Corporation’s (ticker: SEMG) White Cliff Pipeline will be expanded to a total takeaway capacity of 215 MBOPD and is expected to be completed in late 2015. The Grand Mesa Pipeline, owned by NGL Energy Partners LP (ticker: NGL), is being expanded to a capacity of 200 MBOPD, and is expected to come online in Q4’16. Magellan Midstream’s Saddlehorn Pipeline (ticker: MMP) is expected to be complete in the second half of next year, and will had 200 MBOPD of pipeline takeaway capacity to PADD 4 as well.
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