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North Dakota Crude-by-Rail Loadings Plummet with DAPL Startup Imminent

DAPL crude rail loadings

Crude-by-rail loadings in North Dakota kicked off May with volumes at their lowest point since 2012, as the market prepares for the upcoming startup of Energy Transfer Partners’ 470,000 bpd Dakota Access (DAPL) crude pipeline.

For the week ending May 5, loaded crude volumes at the 13 Genscape-monitored rail terminals in North Dakota plummeted 111,000 bpd to 130,000 bpd, the lowest amount since week ending June 1, 2012. Genscape only monitored five rail terminals at the time, but crude production was 664,000 bpd in June 2012, versus 1.026mn bpd in March 2017, according to the latest data from North Dakota's Department of Mineral Resources.

The startup of ETP’s Bakken Pipeline system (which is the Bakken-to-Patoka, IL, DAPL and 470,000 bpd Patoka-to-Nederland, TX, Energy Transfer Crude Oil pipeline) will result in a fundamental shift in how crude is shipped out of the Bakken shale play.

The Dakota Access pipeline is “mechanically complete and line fill operations are set to conclude mid-May,” a company spokeswoman said May 9. The Bakken Pipeline system is set to begin service on June 1, the spokeswoman added.

A company tariff filing on April 13 with the U.S. Federal Energy Regulatory Commission showed that interstate operations will begin on May 14.

Once the Bakken Pipeline system is operational in June, the local refinery and pipeline takeaway capacity will surpass Bakken production in North Dakota and Montana, thereby eliminating the need for crude shipments by rail from the region, Genscape data shows. Bakken production in May is forecast by Genscape to average 1.039mn bpd, while pipeline and local refinery capacity is 878,000 bpd. In June, once DAPL comes online, pipeline and refinery capacity will jump to 1.348mn bpd, with production expected to average 1.027mn bpd.

Bakken production/transportation balance

Crude-by-rail loadings in North Dakota have been on the decline since they peaked at 585,000 bpd in March 2014, according to Genscape, as new pipeline capacity and lower crude production then began to chip away at the volumes. After loadings declined to an average of 296,000 bpd in 2016, 2017 volumes were relatively stable through end-May 2017 at an average of 255,000 bpd.

North Dakota monthly average rail loadings (bpd)

 U.S. East Coast refiners spurn rail volumes for waterborne imports

Refineries on the U.S. East Coast were the first ones to shy away from rail volumes and instead opt for waterborne crude deliveries, Genscape data shows.

Crude-by-rail shipments to the five monitored terminals on the East Coast tumbled 58,000 bpd to 20,000 bpd for the week ending May 5, with only PBF’s 182,200 bpd refinery in Delaware City, DE, posting receipts. The three-week decline for the region was 121,000 bpd. The region averaged 117,000 bpd in 2017 through the end of April.

Some refiners began the move away from railed-in barrels early in the year. After receiving 59,000 bpd by rail in January, Phillip 66’s 238,000 bpd Bayway refinery in Linden, NJ, averaged 15,000 bpd in February and 14,000 bpd in March. There have been no unloaded volumes at the refinery in the past three weeks.

There were no unloadings at the 335,000 bpd Philadelphia Energy Solutions refinery in Pennsylvania last week for the first time since early March 2016. Unloadings at the refinery had a week-on-week drop of 43,000 bpd, and brought the three-week decline to 75,000 bpd.

However, waterborne crude imports to the East Coast have increased in recent weeks, replacing the displaced rail barrels. For the week ending May 4, waterborne imports into PADD 1 averaged 877,000 bpd, putting the three-week average at 873,000 bpd, Genscape data shows. March and February waterborne imports averaged 436,000 bpd and 428,000 bpd, respectively.

Domestic waterborne crude deliveries to the Bayway refinery have stepped up in recent weeks as the rail volumes have dropped off, Genscape data shows. Domestic deliveries to the refinery are averaging 148,000 bpd over the last four weeks, compared to 85,000 bpd over the preceding four weeks. Waterborne imports have increased, as well, to the refinery. Imports received at Bayway have averaged 290,000 bpd the last two weeks, up from the April average of 231,000 bpd.

Genscape added flow data for DAPL to the Mid-Continent Pipeline and PetroRail Bakken services on May 12, 2017. The Dakota Access pipeline flows from Johnsons Corner, ND, to Patoka, IL. The pipeline has further upstream connectivity to the Stanley, Ramberg, Epping, Trenton, and Watford City terminals. According to Dakota Access’ tariff, the pipeline is entering interstate service on May 14, 2017. As such, any flow activity observed prior to that date may be considered as related to linefill activity. DAPL historical data is available beginning March 17, 2017.

Access Genscape's PetroRail report to gain insight into the market with the industry's most comprehensive crude-by-rail data. Receive analysis and market implications of crude-by-rail movements in North America from Genscape's proprietary monitors. To learn more about Genscape's PetroRail report, or to request a free trail, please click here.

Genscape's Mid-Continent Pipeline Service provides insight into major pipeline shutdowns, start-ups, flow changes, and construction. Using its proprietary energy monitoring technology, aerial photography, and industry expertise, Genscape offers an unprecedented view into critical pipelines supplying storage hubs and refineries in the United States and Canada. To learn more about Genscape's Mid-Continent Pipeline Service, or to request a free trial, please click here.

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