March 31, 2014 / 5:50 PM / 4 years ago

UPDATE 1-Global Partners says NY railport expansion could be curbed

(Adds quotes, detail about other rail projects and phase-out of older crude railcars)

March 31 (Reuters) - Global Partners LP’s plans to expand its Albany, New York, crude rail-to-barge operation to handle heavy Canadian crude could be hampered by a government-imposed moratorium, Chief Executive Officer Eric Slifka told analysts on Monday.

The company runs a 160,000-barrel-per-day operation in which North Dakota Bakken crude oil is moved by rail to Albany, then loaded onto barges for delivery to East Coast refineries.

Global Partners is seeking permits to add boilers, reconfigure a railyard and make other changes to add the capability of handling heavy Canadian crude that must be heated before it is offloaded onto barges.

Earlier this month Albany County issued a moratorium that put the company’s application to expand crude oil processing in the Port of Albany on hold pending results of a public health investigation.

In January New York Governor Andrew Cuomo directed a state safety review of crude-by-rail shipments from the Bakken oilfields after a spate of fiery crashes in the United States and Canada. The state expects to finish a report on rail safety by the end of April.

Albany has become a major shipping point for North Dakota crude. Buckeye Partners LP also has a 130,000 bpd rail-to-barge operation there.

Slifka said the moratorium does not affect current operations, but would hamper “the carrying of different products,” such as Canadian crude.

“The facility continues to run and operate the way it has been for the past couple years,” he said during the company’s fourth-quarter earnings call. “We have applications in to try and broaden the array of products that we can carry at the facility and that’s really what it’s all about.”

Slifka also said the company is phasing out 10 percent of its fleet, which comprises older crude railcars built before October 2011 that do not meet current safety standards. The other 90 percent meet those standards adopted by the rail industry that feature thicker hulls and reinforced valves.

U.S. regulators are considering new standards for crude railcars after the crashes, the worst of which involved a runaway train in Quebec last summer that crashed, exploded and killed 47 people.

Global Partners also is seeking permits to add rail infrastructure to load crude onto tankers and barges at its terminal in New Windsor, New York, in Orange County about 90 miles (149 km) south of Albany.

Reporting by Kristen Hays; Editing by Leslie Adler

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