Moody’s Says Quebec Explosion to Boost Oil Shipping Costs

A rail explosion in Quebec will probably boost rates for shipping crude on trains as regulators increase scrutiny on operators, adding costs for North Dakota oil producers, according to Moody’s Investors Service.

The increase in freight rates is “credit negative” for producers in North Dakota’s Bakken formation, including Whiting Petroleum Corp. (WLL), Continental Resources Inc. (CLR), Oasis Petroleum Inc. (OAS) and Kodiak Oil & Gas Corp. (KOG), David Berge and Andrew Brooks, analysts at Moody’s in New York, said in a note today. About two-thirds of North Dakota’s oil production, more than 727,000 barrels a day in April, is delivered by rail, the analysts said.

A runaway train carrying 72 cars of crude jumped the tracks and exploded in Lac-Megantic, Quebec, on July 6, killing as many as 50 people. The train was operated by Montreal, Maine & Atlantic Railway Ltd., a unit of closely-held Rail World Inc., based in Chicago.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.