September 3, 2014 / 4:35 PM / 5 years ago

UPDATE 1-Phillips 66 to add railcars to move more crude to coast refineries

(Updates to add shipments will include Canadian crude, comment on proposed California rail project)

By Kristen Hays

HOUSTON, Sept 3 (Reuters) - Phillips 66 is buying more railcars to eventually move up to 185,000 barrels per day (bpd) of North American crude oil, including output from North Dakota’s Bakken shale and Canada, to its refineries on the East and West coasts, Chief Executive Officer Greg Garland said on Wednesday.

The fourth-largest U.S. refiner has already bought, or has on order, 3,200 railcars. Garland said during a webcast of a presentation at the Barclays CEO Energy-Power Conference that the company has ordered another 500 railcars to boost its fleet to 3,700 railcars.

On Aug. 1 the company’s 238,000-bpd Bayway refinery in Linden, New Jersey, received its first crude-only train at the plant’s newly expanded offloading system. The system can take up to 70,000 bpd, in addition to up to 75,000 bpd from a joint venture with Global Partners.

Phillips 66’s 30,000-bpd offloading system at its 100,000-bpd refinery in Ferndale, Washington, is on track to start up in the fourth quarter, Garland said.

Garland said the company was “disappointed” in the lengthy permitting process for a rail offloading project at its refinery in Santa Maria, California, but remained optimistic it would be built.

The Santa Maria operates in tandem with the company’s Rodeo, California, refinery, with a combined capacity of 120,200 bpd. The rail project would bring in about 40,000 bpd of heavy oil, like that produced in Canada rather than light Bakken crude, according to the company.

A local planning commission meeting to consider approving the project has been pushed to January from April to allow an environmental impact report produced in late 2013 to be recirculated for more public comment.

It is one of several crude-by-rail projects in California that have faced much scrutiny and lengthy permitting processes in light of several fiery crude train crashes in the past year.

Next week, Kern County supervisors are expected to approve Alon USA Energy’s proposed 140,000 bpd rail offloading project at its Bakersfield refinery, which has been shut since late 2012 because lack of access to cheaper inland U.S. crudes rendered the plant unprofitable.

If approved as expected, it would be the first substantial new such project to win approval in California.

“It just takes time in California to get these things permitted,” Garland said. (Editing by Jeffrey Benkoe and Bernadette Baum)

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