Riding the shale rail

Bakken producers take to the tracks; pipeline capacity also on the rise

AS OIL production from the prolific Bakken Shale has ramped up, swiftly outstripping pipeline capacity, producers have turned to the railways to deliver their crude to market. As of December last year, railcars were carrying up to 65,000 barrels of oil out of the region – about 18% of its total production. That figure is expected to rise further as additional rail facilities are brought into service. Although trains have been used to ship crude oil in the past, expansion of the US pipeline grid made rail transportation less appealing. But when production began in the Bakken Shale in 2008, it quickly exceeded pipeline takeaway capacity. Consequently, Bakken crude was being sold at a discount