Crescent Point sets up its own crude-by-rail facility

Crescent Point sets up its own crude-by-rail facility
By Brian Zinchuk
Pipeline News
April 2012 A3
Stoughton – Driving along Highway 33 near Stoughton, there’s a good chance you’re likely to see a whole bunch of black railway tanker cars along the side of the highway, just west of the town. It’s the latest crude-by-rail facility to be set up in southeast Saskatchewan, and apparently has implemented some lessons learned from other facilities.
For instance, the new transload facility, built and operated by Crescent Point Energy Corp. is located outside of town, unlike Canadian Pacific’s Estevan transload facility. And it’s adjacent to a provincial highway, not a paved RM road, like CN’s Willmar facility. Th e company has also worked with the RM of Tecumseh on the roads issues.
Dale Rinas is Crescent Point’s southeast Saskatchewan field manager, based in Weyburn. He provided some details on the new facility, which was built in January and opened in February.
“Our site can hold 31 cars at a time,” he said, noting that a unit train is 80. Each car holds 600 to 650 barrels of oil.”
The Stoughton facility is different from most rail facilities in a couple of ways. First, it’s on a shortline, a line that was once owned by CN, but is now run by Fillmore-based Stewart Southern Rail, primarily for agricultural purposes. As CN pulled out the track east of Stoughton years ago, the community is effectively the end of the line. Since there will be no traffic going past it, no siding is needed, and tanker cars can be loaded directly on the regular rail line. It also means many more cars can be stored there. Pipeline News counted over 70, effectively a unit train, on March 9.
There are two transloading units on site, and cars are loaded from the top in this configuration.
What’s perhaps most important about the Stoughton transloading facility is its location: smack dab in the middle of the Viewfield Bakken play, and just a few miles from Crescent Point’s major facility at 13-5-8-8W2, the Viewfield gas plant. The company constructed two 60,000-bbl. tanks there in recent years.
That begs the question: will Crescent Point simply pipeline its oil to the transload site from the Viewfield plant?
“That’s in our plans and being negotiated,” Rinas said, adding it’s being looked at, but has not yet been decided.
If such a pipeline were built, tankage would be required, and the site would start to take on some of the properties seen in more substantial facilities in North Dakota, where crude-by-rail has become the key alternative to pipeline shipments.
And therein lies the explanation of why Crescent Point is now shipping crude-by-rail. Rinas said, “Having this rail to ourselves gives us diversity beyond the Enbridge pipe. You’ve got diversity in other markets, and if the pipeline has issues, diversity in shipping.”
It’s no secret that crude traded on the West Texas Intermediate benchmark is going for a substantial discount compared to the more global Brent benchmark. On March 19, the April contract for WTI closed at $107.06 per barrel,while North Sea Brent blend went for $126.13. Th e Brent price has a difference of $19.07, or 17.8 per cent higher.
“With rail, you can get to the East Coast,” Rinas said. That would allow Crescent Point to trade in that market, or any other on North America, for that matter.
Crescent Point’s southeast Saskatchewan production is around 60,000 boepd, but once you strip out the gas and NGLs, the oil production number is closer to 46,000 to 47,000 bpd. Coincidentally, an 80-car unit train at 650-bbl. per car would have a capacity of 52,000, or all of Crescent Point’s daily production from the region, in one train.
That’s not going to happen, however. With the facilities currently in place, Rinas noted, “You can’t load all that in one day. With two transloaders, we’re doing about 8,000 barrels per day.
“We have commitment to pipe as well.”
In March, they had 260 cars lined up, but not all were able to be delivered.
“We’re prepared to ramp up to 10,000 to 15,000 barrels per day by midsummer,” Rinas said. “We’re up to fi ve guys now. We brought them on early  and trained them as battery operators.”
Crescent Point’s growth trend is continuing upward, with a recent purchase of PetroBakken interests east and west of Stoughton that will allow for unitization and waterflooding.
The company is also the leading player in the Lower Shaunavon play, an area that is coincidentally also served by a short line rail operator and has growing production. Rinas said they are looking at similar options at Shaunavon, but that has not yet been decided.
Asked if other companies would be able to use the Stoughton facility for shipping their crude, Rinas responded, “Right now we’re busy moving our own oil.”

About prosperitysaskatchewan

Consultant and Radio Broadcaster on Saskatchewan's natural resources.

Posted on April 23, 2012, in Uncategorized and tagged . Bookmark the permalink. Leave a comment.

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