BNSF expands Bakken rail capacity from North Dakota, Montana

Reuters News
Posted: Sep 04, 2012 4:12 PM
BNSF expands Bakken rail capacity from North Dakota, Montana

NEW YORK (Reuters) - BNSF Railway on Tuesday said it has expanded its capacity to transport 1 million barrels-per-day of shale oil from the Bakken formation in North Dakota and Montana in 2012.

The Forth Worth, Texas-based company transported 88.9 million barrels of Bakken crude so far in 2012, nearly 7,000 percent higher than when it started shipping the crude by rail five years ago.

"We see this trend continuing," Dave Garin, BNSF group president for industrial product, said in a statement.

The company had previously said it would spend $1.1 billion to buy locomotives, freight cars and other equipment, much of which would serve North Dakota.

BNSF's network now reaches all major coastal and inland crude markets, serving 30 percent of U.S. refineries, the company said. It has 1,000 miles of rail lines in the Williston basin where the Bakken shale lies and serves eight terminals, with two more scheduled to come online at the end of this year.

The railroad is investing $197 million on projects like track surfacing, building two inspection tracks and replacing 121 miles of rail line, among others, in North Dakota and Montana.

Railroads are a key means of transporting domestic crude from central United States to coastal refineries, as technology unlocks massive oil reserves while pipeline construction lags.

Oil output from the Bakken shale in North Dakota alone reached more than 660,000 bpd in June, after doubling in under two years.

BNSF did not specify its capacity before the recent upgrade.

(Reporting by Selam Gebrekidan; Editing by Bob Burgdorfer and Dan Grebler)