September 4, 2012 / 8:13 PM / 6 years ago

UPDATE 2-BNSF expands Bakken rail ability from N.Dakota, Montana

NEW YORK, Sept 4 (Reuters) - BNSF Railway on Tuesday said it has expanded its capacity to transport 1 million barrels-per-day of shale oil from the Bakken formation in North Dakota and Montana in 2012, a 25 percent increase from a year earlier.

The Forth Worth, Texas-based company expects to use a quarter of this capacity in 2012. Still, with 88.9 million barrels of Bakken crude shipped on its rail cars in 2012, it will witness a nearly 7,000 percent growth since it started shipping by rail five years ago.

“We see this trend continuing,” Dave Garin, BNSF group president for industrial product, said in a statement.

The company had previously said it would spend $1.1 billion to buy locomotives, freight cars and other equipment, much of which would serve North Dakota.

BNSF’s network now reaches all major coastal and inland crude markets, serving 30 percent of U.S. refineries, the company said. It has 1,000 miles of rail lines in the Williston basin where the Bakken shale lies and serves eight terminals, with two more scheduled to come online at the end of this year.

The railroad is investing $197 million on projects like track surfacing, building two inspection tracks and replacing 121 miles of rail line, among others, in North Dakota and Montana.

Railroads are a major means of transporting domestic crude from the central United States to coastal refineries, as technology unlocks massive oil reserves while pipeline construction lags.

Oil output from the Bakken shale in North Dakota alone reached more than 660,000 bpd in June, after doubling in under two years.

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