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West Coast refining: Higher yields make Bakken crude by rail economical

Tesoro Corp. says that in spite of higher costs, it is continuing to see the value in receiving rail shipments of North Dakota Bakken crude at its Washington state refinery due to improved yields.

As reported by Reuters, Tesoro CEO Greg Goff told analysts, “We still see economic value to be able to move Bakken to the West Coast and achieve the benefits that we have always stated, which primarily are driven by the yield improvements in the refineries.”

The discounts applied to crude produced in the Bakken and other areas have narrowed in the wake of the global oil price slump, greatly reducing the profitability of transporting crude by rail. Last month at the North Dakota Petroleum Council’s annual meeting, Justin Kringstad, director of the state’s pipeline authority, said that North Dakota’s Bakken crude will continue to head to the U.S. West Coast via rail.

According to data from the American Assocation of Railroads, oil-by-rail shipments across the nation are down by approximately 13 percent over the past year. Although new pipelines have become operational in recent years, no pipelines have been planned to cross the Rocky Mountain Range. Kringstad said, “The West Coast will be serviced by rail for the foreseeable future.”

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