Oil Industry Uses Railway - KMOT.COM - Minot, ND - News, Weather, Sports

Oil Industry Uses Railway

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North Dakota's oil industry grows closer to hitting the landmark of 1 million barrels of oil per day. And with the increase of production, the process of shipping the oil has stayed the same.

With the increased production companies are continuing to choose railroads as the method to transport Bakken crude oil.

The sound of an oil train rolling through town is familiar to many North Dakotans.

"We are now seeing 69 percent of the crude oil today is moving by rail car to refineries either on the East Coast West Coast or Gulf coast," says Justin Kringstad, director N.D. Pipeline Authority. 

"In 2008 oil companies switched over from pipelines to trains in order to transport their oil out of the Bakken."

"In today's environment, rail has now become one of the preferred methods of transportation rather than a default as it's become a preferred method because the means of moving crude oil to markets with an increased price points than they can receive by the pipeline markets," says Kringstad.

While the arrangement works well for oil producers, the agriculture business has had to the share the rails with the increased oil field traffic.

"One of the things we have received quite a few phone calls about at the Petroleum Service Corporation and ag shippers concerned because some of the track is not available because of oil shipments. So, there has been some increase congestion on the rail roads, but on the flip side we are seeing an increase in rail investment," says Brian Kalk, Public Service Commissioner

Despite rail congestion Kalk says he thinks the increase in trains has provided some positives in terms of repairing parts of the rail system.

"So we are seeing an increase in rail investment maybe some of the tracks haven't seen maintenance in the past years, and they're getting it through the increased traffic. There are pros and cons with everything. The ag shippers are feeling some of the strain a little bit, but there's an increase interest in rail so that's probably a good thing for the state," says Kalk.

Kalk says several companies have already begun maintenance on sections of tracks, including extensions in certain areas.

Both say the mixture of pipelines and rail will continue to move North Dakota's oil. Kalk says he believes companies have been choosing rail roads as an alternative solution, to waiting for the Keystone pipeline to be approved. Kringstaad says the Keystone pipeline could play a major role in moving oil out of the state.

 

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