P lains All American Pipeline (PAA) has reached a $500 million deal to buy four rail facilities from U.S. Development Group. One of those facilities is part of the Gardendale Rail System near Cotulla, TX.
The four facilities are rail terminals:
- Van Hook Crude Terminal – New Town, ND (servicing the Bakken)
- Niobrara Crude Terminal – Carr, CO
- Eagle Ford Crude Terminal – Cotulla, TX
- St. James Rail Terminal – St. James, LA
The three crude terminals have daily loading capacity of 85,000 b/d and the rail terminal at St. James has unloading capacity of 140,000 b/d. An unloading facility is also planned for Bakersfield California.
Dan Borgen, U.S. Dev. Group CEO, said …”Plains has proven to be a great terminal and pipeline partner for USD, and we believe that this transaction will provide for the most efficient optimization of the assets involved.”
“These assets represent a very attractive addition to our existing North American rail activities….” said Greg L. Armstrong, Chairman and CEO of PAA. “Given recent and projected increases in North American crude oil production and volumetric and quality imbalances expected to occur in certain regions over the next several years, we believe that strategically located rail loading and unloading assets will continue to play an important role in the transportation of crude oil in North America.”
Crude oil pricing is as dynamic as ever across the U.S. Growing production in the Bakken and West Texas have put downward pressure on WTI (priced at Cushing, OK). On December 10, 2012, WTI was trading at ~ $86.50 / bbl and Brent crude was trading a little over $108 / bbl. That’s a wide spread that creates attractive crude by rail economics. Plains also has an extensive NGL rail network and expects to have as many as 6,700 rail cars under lease by year-end 2013.
Plains All American Pipeline’s company wide crude oil loading capacity is now 250,000 b/d and unloading capacity is 335,000 b/d on the East Coast, Gulf Coast, and West Coast.
Read the full press release at paalp.com