NuStar rails Bakken crude oil to Louisiana

Fri Apr 16, 2010 11:04am EDT

Related Topics

* Bakken prospect has been hampered by lack of outlets

* NuStar joins other efforts to get the oil to market

HOUSTON, April 16 (Reuters) - NuStar Energy LP (NS.N) has unloaded its first rail shipment of Bakken crude oil from North Dakota at a terminal in St. James, Louisiana, and plans to ship up to 10,000 barrels per day, the company said in a news release Friday.

The delivery of 5,000 barrels opens up an outlet for the Bakken shale development, one of the hottest new oil production prospects in the United States that has been hampered by a shortage of pipeline capacity to market.

NuStar is working with BNSF, Union Pacific (UNP.N) and Canadian Pacific (CP.N) railroads on the initiative, a NuStar spokeswoman said.

"The Bakken crude oil sources in North Dakota are of critical importance to the United States oil and gas industry," NuStar President and Chief Executive Curt Anastasio said.

"We think there's a lot of potential to market this product through St. James, so we have short-term and long-term plans to increase the amount of crude oil that we can ship there," Anastasio said.

EOG Resources (EOG.N) last May announced plans to rail Bakken oil out to Cushing, Oklahoma, the New York Mercantile Exchange delivery point, and Enbridge Inc ENF_u.TO was expanding its North Dakota pipeline system to be able to handle more Bakken.

The Bakken is largely a shale oil prospect, and the downward dip in crude oil prices and lack of demand because of the recession also were factors slowing its development, which is more costly than conventional oil production, experts said.

But prices have been rising recently, improving prospects for the Bakken area.

The NuStar shipment arrived by rail late last week and was unloaded earlier this week, a NuStar spokeswoman said. (Reporting by Bruce Nichols; Editing by Lisa Shumaker)

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