December 19, 2011 [OPIS] - Sunoco Logistics will be ready to deliver Bakken crude oil from North Dakota to Eagle Point terminaling facility in New Jersey within the next couple of weeks, industry sources in New York Harbor told OPIS.
OPIS first reported on Nov. 7 the plan to deliver relatively cheaper Mid-con light sweet crude to Northeast refineries, possibly ConocoPhillips’ Bayway refinery and/or Sunoco’s sole operating refinery in Philadelphia.
Initially, the rail logistics will be able to deliver at least 25 rail cars a day. An actual crude delivery could occur sometime in January.
The original plan is to deliver about 20,000 b/d of Bakken crude in about 60 rail cars or about 39,000 bbl in two days. The company will reach that target eventually. The rail delivery could reach a maximum capacity of 70,000 b/d in the future, depending on the Midcon crude demand in the Northeast. Sunoco Logistics is still in discussions with potential customers for this delivery.
“Sunoco Logistics would not be doing this (Bakken crude delivery) if there was no prior interest,” a source said, adding that the company had plowed some investment into the rail project.
The limited flow of Mid-con crude may provide a lifeline for Sunoco’s Philly refinery as well as ConocoPhillips’ Bayway plant. All two refineries, which run light sweet crude, faced low refining margins for most part of this year due to high landed cost of West African crude cargoes. Although the Bakken crude delivery volume is relatively small compared with the crude runs at Bayway and Philly refineries, the discounted Mid-con crude should help the refineries’ bottom lines.
Sunoco is open to deliver the crude as a common carrier or market the crude if needed. The company has yet to sign up a marketing or transportation agreement with the two refiners.
In the longer term, the unit rail delivery system could be used to deliver ethanol or butane if a demand arises. Sunoco Logistics’ Eagle Point terminal has a total operational capacity of 5 million bbl. Of which, 60% is allocated to clean oil products and the remaining 40% to crude and vacuum gas oil.
The terminal will expand its storage capacity by up to another 1 million bbl at the end of the first quarter of 2012, but the new capacity will be dedicated to clean products. As reported previously by OPIS, the Bayway refinery is now receiving about 10,000 b/d of Bakken crude via barge from Albany, N.Y.
Global Partners LP is shipping the Midcon crude via rail to Albany, and then shipping it to Bayway via barge. Global is also responsible for marketing as well as shipping the crude.
