N.D. crude moves more by rail than pipeline

Railroads are moving three-quarters of the crude oil in North Dakota to markets, according to Justin Kringstad, director of the North Dakota Pipeline Authority in Bismarck.

“They’re a very active player, to the tune of 75 percent of our oil now moved by rail cars. Only 25 percent is moving by pipeline in current market conditions,” Kringstad told members of the Minot Area Chamber of Commerce’s Energy Committee during a recent meeting at Minot’s Vegas Motel.

“This is something we expect to kind of move back and forth as pipeline projects come on line, but it’s very interesting that three-quarters of our oil is moving by rail,” he said.

Kringstad said the first movement of oil by rail car started in August 2008.

“Since then, it’s just been growing as production has ramped up so rapidly,” he said.

He said the latest statistics show that about 675,000 barrels of oil per day are being moved out of North Dakota by rail.

Although the North Dakota Pipeline Authority is called the pipeline authority, he said it is just as active on the rail side.

The pipeline authority is under the North Dakota Industrial Commission comprised of the governor, attorney general and agriculture commissioner.

He said the pipeline authority is unique because it is not a regulatory agency but is strictly on the business development side, working with the pipeline companies and processing companies to make sure they have adequate means of moving and processing North Dakota’s oil and natural gas.

He said the latest data available shows there was 2,353 miles of pipeline operating in the state in 2011. That, he said, is approximately the same mileage as from Seattle to Washington, D.C.

North Dakota shares transportation infrastructure with eastern Montana and South Dakota. Kringstad said there are basically two challenges for moving Bakken crude oil moving the oil out of the area since much more is produced than can be consumed at the local refinery, and moving it safely and effectively.

The Tesoro Mandan Refinery at Mandan is the only refinery in the state.

He said three small refining facilities are proposed in the state and two have broken ground MDU Resources Group’s refinery near Dickinson and the Three Affiliated Tribes’ Thunder Butte Petroleum Services refinery near Makoti. A third project in the Williston area is still working on the business development phase, he said.

Currently, three major pipeline systems are operating in the state Enbridge with offices in Minot, Tesoro with its refinery in Mandan and True Companies, a family-owned company out of Casper, Wyo., that owns several pipelines.

A number of rail-loading facilities now are operating in North Dakota handling crude oil. The Canadian Pacific Railway and BNSF serve those facilities.

One hundred to 120 car trains pull in and get loaded at these facilities, he said. He said the crude can be delivered by truck or by pipeline.

“It’s a pretty efficient process moving those trains in and out,” he said.

He said there were times when there wasn’t adequate transportation for North Dakota’s crude oil for various reasons.

“With more pipeline projects under way along with rail, he said the good news is the oil should be able to be moved and barrels of oil should not be stranded in the state because there is no means to move it out of the region with the combination of pipelines and rail.

With the existing rail structure now in place, he said they can reach refineries in many different areas of the country.

In regard to the Keystone XL Pipeline, he said, it would be able to handle 100,000 barrels a day from the Bakken crude oil loaded near Baker, Mont.

“Going forward, we see that as a key component of our infrastructure just the timing of it right now there’s some uncertainty,” he said.