DL gets first shipment of ND oil today via rail....article

[General Lee]

ND oil shipped to Pa. refinery to make jet fuel

North Dakota oil shipped to Philadelphia-area refinery to make jet fuel for Delta Air Lines

Associated Press – 3 hours ago

BISMARCK, N.D. (AP) -- Gov. Jack Dalrymple says Delta Air Lines Inc.'s Philadelphia-area refinery got its first shipment of North Dakota crude oil this week.
The airline plans to make jet fuel from North Dakota oil at the factory.
Delta bought the idled refinery from a division of ConocoPhillips for $150 million. Delta has said it expects the refinery to save about $300 million annually in airline fuel costs.

Delta announced earlier this month that it will begin twice-daily flights between Dickinson and Minneapolis-St. Paul beginning June 10.





Bye Bye---General Lee

 

[Andy]

Do you know where the railcars are loaded? Clearbrook, MN? High Prarie Pipeline has a pipeline that's used to move the oil to the Clearbrook terminus. Last I read, Enbridge refused to carry Bakken crude on their Lakehead system that would allow the oil to be moved down to Flanagan, IL (or onward to Cushing, OK).

The further they're able to move the oil by pipeline, the more they're able to reduce cost per barrel. I've read a wide range of transport by rail costs - anywhere from $12 to $22 per barrel. If Delta's able to get oil moved mostly by pipeline, the cost would drop dramatically.

The spot price at Clearbrook for Bakken crude is currently running ~$.75 less than WTI. Even at $22/bbl transport costs, it looks like it's still slightly cheaper to go with Bakken than Nigerian crude.

 

[General Lee]

Do you know where the railcars are loaded? Clearbrook, MN? High Prarie Pipeline has a pipeline that's used to move the oil to the Clearbrook terminus. Last I read, Enbridge refused to carry Bakken crude on their Lakehead system that would allow the oil to be moved down to Flanagan, IL (or onward to Cushing, OK).

The further they're able to move the oil by pipeline, the more they're able to reduce cost per barrel. I've read a wide range of transport by rail costs - anywhere from $12 to $22 per barrel. If Delta's able to get oil moved mostly by pipeline, the cost would drop dramatically.

The spot price at Clearbrook for Bakken crude is currently running ~$.75 less than WTI. Even at $22/bbl transport costs, it looks like it's still slightly cheaper to go with Bakken than Nigerian crude.

Andy,

I don't know where they are loaded, but it sounds like they have moved away from the tanker oil from Nigeria, and if there is a savings (even $.75 per barrel) over the competition, it is a good thing. If the savings is significant over the long term, maybe your own management will look into it.


Bye Bye---General Lee

 

[General Lee]

Perth Amboy refinery to get new life from $200 million overhaul[/Buckeye filing with Securities and Exchange Commission

Aug 08, 2012. The Star-Ledger. By Elliot Caroom. Www nj .com


A Perth Amboy refinery will be busier than it has been in nearly three decades after pipeline company Buckeye Partners bought it from Chevron for $260 million, with plans to spend another $200 million or more expanding operations.
First opened as a refinery in 1920, the site has four docks and can store about 4 million barrels of oil products. The property, which sits south of the Turnpike, was scaled back by Chevron in 1983 to produce only asphalt.
Now that will change under the ownership of Buckeye, which operates 6,000 miles of pipelines, mostly in the Northeast and Midwest United States, and which already owns a 3 million barrel storage complex in Linden.

Buckeye’s plan is driven by changing dynamics in crude oil markets—while supplies are tight on the East Coast, a glut of oil exists in the western United States thanks in part to increased production of "Bakken’’ shale oil from Montana, the Dakotas and Canada. That makes it profitable for Buckeye to transport crude Bakken shale oil by train, and other oil supplies by boat from a hub in the Bahamas.

"We expect to spend approximately $200 million to $225 million of growth capital at Perth Amboy over the next three years to modernize the facility, transform it into a highly efficient multiproduct storage, blending and throughput facility," said Clark Smith, Buckeye’s CEO, on a recent earnings call.
Perth Amboy’s Mayor Wilda Diaz described Buckeye’s plans as an "economic engine for the town.’’

"The City of Perth Amboy welcomes that investment because it creates jobs," Diaz said. "For many years Chevron was actually stagnant there, they only had about 25 employees."

"We’ll be looking to bring in some construction services and things and that will create some job opportunities," said company spokesman Brannon Rushing. "It’s definitely going to take people to get the infrastructure in place and to operate the facility at the higher standards we’re going to equipment it at."

Smith said his company hopes to import crude oil from the Bakken shale formation for oil-hungry customers in the Northeast, according toa transcript from the company conference call by financial website Seeking Alpha.

Bakken oil is far cheaper than the Brent crude typically refined on the East Coast, but getting it here requires a journey by train or pipeline.
High crude prices in the Northeast had prompted recent refinery sales including that of Philadelphia-area facility Trainer bought by Delta Airlines. Some analysts said unless it imported cheaper oil by train or boat, Delta would be hard pressed to make money.

But now Buckeye is exploring the option of importing Bakken crude by train at the behest of several unidentified customers.

The company’s management is keeping an eye on the jet fuel market as it also considers expanding pipelines to John F. Kennedy International Airport in the future, according to an investor presentation this spring.

Besides storing oil from trains, the company told investors it wants Perth Amboy to "connect the dots" with BORCO, Buckeye’s huge fuel hub in the Bahamas.

BORCO, which is 920 or so miles from New York Harbor, has 21 million barrels of capacity, the largest storage terminal facility in the Caribbean.
Buckeye hopes its acquisition is good news not just for Perth Amboy, but for the company: the deal figures prominently in its growth strategy following a downgraded outlook from credit rating agency Moody’s, which took the company from stable to negative this spring.

Before the deal closed, Moody’s said the Perth Amboy purchase would help diversify the company, but said Buckeye was highly leveraged and needed strong earnings from Perth Amboy and other properties to cut down on its leverage.

Part of the plan in Perth Amboy is a continued deal with Chevron, which will remain a customer at the terminal for several years.
There are also plans to integrate the storage tanks at Linden: the company wants to build a 16-inch pipeline between the tanks and Perth Amboy, about six miles away.

"Making that connection from Linden is going to be key for us in terms of feeding our existing pipeline infrastructure," Rushing said.



Bye Bye---General Lee

 

[Flyer1015]

Good for Delta. Meanwhile in the USA we have oil refiniries being shut to regulate production levels and oil companies exporting oil overseas because they can sell it for a higher price, therefore driving up oil prices here.

 

[General Lee]

Good for Delta. Meanwhile in the USA we have oil refiniries being shut to regulate production levels and oil companies exporting oil overseas because they can sell it for a higher price, therefore driving up oil prices here.

I have read that DL is the second largest fuel purchaser in the World, behind the US Department of Defense. If you buy that much fuel, wouldn't it be a good idea to try to bring the price down a little, even 50 cents a barrel or whatever? It all helps.


Bye Bye---General Lee

 

[Flyer1015]

I have read that DL is the second largest fuel purchaser in the World, behind the US Department of Defense. If you buy that much fuel, wouldn't it be a good idea to try to bring the price down a little, even 50 cents a barrel or whatever? It all helps.


Bye Bye---General Lee

I agree, I think the oil refinery was a good move for Delta.

 

[get2flyin]

Yuuuuup!

 

[scoreboardII]

I have read that DL is the second largest fuel purchaser in the World, behind the US Department of Defense. If you buy that much fuel, wouldn't it be a good idea to try to bring the price down a little, even 50 cents a barrel or whatever? It all helps.


Bye Bye---General Lee

the answer lies in why then, doesn't the US military make their own oil?

 

[jonjuan]

the answer lies in why then, doesn't the US military make their own oil?

Because they would rather pay for $30,000 toilet seats.