* Canadian Pacific to start Bakken oil shipments this summer
* Terminal will have 35,000 bpd capacity
* Terminal to handle up to 15 unit trains a month
By Selam Gebrekidan and Nicole Mordant
NEW YORK, March 6 Canadian Pacific Railway
Ltd said on Tuesday that it should start shipping crude
oil this summer from a soon-to-be-completed oil terminal in
North Dakota's prolific Bakken shale prospect.
Texas-based U.S. Development Group is developing a
35,000-barrel-per-day terminal in Van Hook, N.D., about 100
miles (160.9 km) east of Williston, and Canadian Pacific will be
the only railway company using the terminal.
The Van Hook Hub will be fully online by midsummer,
according to Meg Martin, a USD spokeswoman. The hub will receive
truck and tanker shipments of crude oil and condensate from the
Bakken shale prospect for shipment to markets elsewhere in the
Calgary, Alberta-based CP is making infrastructure
improvements on its North Dakota network in order to serve the
terminal. The investment is part of about C$100 ($99.84) million
that CP, Canada's second biggest railroad, earmarked last year
for improving tracks in the U.S. Midwest.
The terminal will accommodate up to 15 crude unit trains per
month, which can later be expanded to 30 unit trains per month.
CP currently ships sand used in the controversial hydraulic
fracturing process in the North Dakota shale prospect and
transports crude oil out of the Bakken.
The company shipped more than 23,000 barrels per day of
crude from the Bakken in 2011 and plans to increase that to
about 125,000 bpd, or 70,000 carloads, in coming years.
"We have seen this market grow much faster than we ever
expected it," Tracy Robinson, CP's energy and merchandise
vice-president said in an interview.
She added that CP remains in talks with USD and others about
possible future oil shipping opportunities.
USD has been receiving Bakken crude shipments at its 65,000
bpd terminal in St. James, Louisiana, for over a year and is
currently undertaking expansion projects to double its size. The
terminal is ideally located near the Gulf Coast refining hub.
Rail transport has taken a foothold in the U.S. Midwest as
imports of Canadian crude soared in the past few years, along
with domestic shale oil output. The Bakken shale prospect alone
gushed at 470,000 bpd in December.
Industry analysts previously estimated crude rail shipments
from the Midwest to the Gulf Coast could soar to 300,000 bpd
While more expensive than using pipelines, shipping by rail
is more flexible, by allowing producers to route shipments to
refineries that are paying more for crude.
"We're never going to be at a place where we believe rail
will be a replacement for pipelines. But we are a good
complement that gives the oil industry flexibility and
capacity," CP's chief marketing officer Jane O'Hagan said in an
USD did not immediately provide cost estimates for the Van
USD has other terminals in the heart of other shale
prospects in the United States, including the Eagle Ford in
Texas and Niobrara in Colorado. This will be its first crude
terminal in North Dakota.
CP is in the middle of a proxy battle with its biggest
shareholder, Pershing Square Capital Management, which wants to
replace the railroad's CEO because its operational performance
has lagged the industry.