Global Partners LP, a fuel marketer based in Waltham, Massachusetts, has sent its first shipment of Bakken oil by rail to the U.S. East Coast from North Dakota.
The train, carrying about 45,000 barrels, will deliver the oil to storage tanks in Albany, New York, Mark Romaine, senior vice president of supply and distribution in Waltham, said in a telephone interview. It may arrive as early as next week, the company said in an Oct. 19 statement.
Global has received “interest from multiple refiners,” he said. “This will be a business we try to develop. We’ll try to run that on a rateable basis.” The oil hasn’t been sold yet, according to Romaine. Another train is in the process of loading now, he said.
East Coast refiners have struggled to turn a profit as the price of imported oil from West Africa has surged after unrest in Libya curbed output of the light, low-sulfur oil processed in the plants. ConocoPhillips (COP) and Sunoco Inc. (SUN) plan to shut three refineries in the Philadelphia area if they can’t find buyers.
The crack spread, a measure of the difference between the cost of European benchmark Brent crude and the price at which refiners sell fuel in New York, has dropped 25 percent so far in 2011 from its 2007 average.
Global’s Albany terminal is serviced by Canadian Pacific Railway Ltd. (CP) and has 1.4 million barrels of storage, some of which will be dedicated to Bakken oil, said Romaine. Global Partners will ship the oil by time-chartered barge to refiners along the East Coast from Albany, he said.
Sunoco, a Philadelphia-based company that has owned refineries for 117 years, will idle main processing units at its Philadelphia and Marcus Hook, Pennsylvania, plants in July if it can’t sell the plants, the company said Sept. 6. The refineries have a combined capacity of 549,000 barrels a day.
“Despite our best efforts, our refining and supply business has lost money in eight out of the last 10 quarters,” Lynn Elsenhans, chairman and chief executive officer of the company, said at the time. The company doesn’t expect Northeast refinery profit margins to improve, she said.
Conoco halted crude processing at its Trainer, Pennsylvania, refinery Sept. 30 and will permanently close the plant in six months if a buyer isn’t found, according to the company. Trainer can process 185,000 barrels of oil a day.
The gap between the U.S. benchmark West Texas Intermediate and Brent December contracts was $22.96 today. That’s down from a record $27.88 a barrel Oct. 14.
Nigerian Bonny Light crude rose to $113.75 a barrel today on a spot basis, according to data compiled by Bloomberg. It costs about $1.66 a barrel to ship the oil to the East Coast. Bakken cost $89.61 a barrel in North Dakota.
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