Tracking Bakken oil movement: 40 percent of SW North Dakota crude leaves via railway
While some in Dickinson -- particularly on the south side of town -- might only notice a passing train when it's holding up traffic at a crossing or when its horn is alerting motorists and pedestrians, the railroad is actually a key logistic component of the Bakken oil play.
Because of the lack of pipeline alternatives to move oil to refineries, when the North Dakota Oil Patch began to explode a few years ago, energy companies turned to moving much of their crude by railway. One of the largest railroad transportation companies in the U.S., BNSF Railway has stepped to the plate as the Oil Patch has played a key role in the country's push toward energy independence.
"Historically, oil and gas producers have used pipelines to transport crude from production to refineries," said BNSF Executive Vice President and Chief Marketing Officer John Lanigan. "Because this shale development growth came about so quickly, there has been a shortage of pipeline capacity to coastal refineries. BNSF has responded quickly to enable producers to move crude to the most attractive markets."
Like nearly every other service provider in and around the Oil Patch, BNSF has been busy -- very busy.
"BNSF has been hauling Bakken crude out of the Williston Basin area for over five years," BNSF executive Dave Garin said earlier this year. "In that time, we have seen the volume increase nearly 7,000 percent, from 1.3 million barrels in 2008 to 88.9 million barrels in 2012. We see this trend continuing."
BNSF is connected to 16 of the top 19 oil-producing counties in central and western North Dakota, but petroleum isn't the only resource being shipped via railroad, said railway spokesperson Amy McBeth.
"For 2012, we will invest an estimated $86 million on maintenance and rail capacity improvement projects in North Dakota," McBeth said. "BNSF hauls more than 40 percent of Bakken production. In addition to oil, BNSF hauls inbound materials needed for each new well, such as sand and pipe."
Whether it is materials needed for hydraulic fracturing or the black gold itself, the industry has been counting on railway shipping. With pipeline projects -- including the infamous Keystone XL Pipeline -- being discussed and, in some cases, coming to fruition, certain logistical avenues could move away from the railroad. That, however, isn't expected to happen any time soon.
"Each year, BNSF also moves more than 15 million tons of wheat, soybeans, corn, sugar beets, beans and other agricultural products from North Dakota to plants around the country," McBeth said. "In all, we move more than 1.5 million carloads of freight in North Dakota annually. The top products by volume shipped from the state by rail are agricultural products, industrial products (which includes crude oil) and coal."
As far as what BNSF refers to as its "Dickinson Subdivision," the route going through Dickinson could be called the Grand Central Station of Oil Patch railway movement.
"Dickinson is one of the major rail yards BNSF has in the state," McBeth said. "Overall, we employ about 1,500 people in North Dakota."