Oct. 9 (Bloomberg) -- Statoil ASA has leased 1,000 railcars for use in the Bakken formation in North Dakota and plans to deliver by rail to refineries on both coasts.
The Oslo-based energy company recently delivered a rail shipment of Bakken crude to Irving Oil Corp.’s Saint John refinery in New Brunswick, Bill Maloney, Statoil’s executive vice president for development and production in North America, said in an interview in Houston. The 298,800-barrel-a-day plant is Canada’s largest.
Statoil produced about 26,000 barrels of oil equivalent a day in the Bakken in the first quarter. It expects to move 10 percent to 20 percent of the oil by rail, said Torstein Hole, Statoil’s senior vice president for U.S. onshore development and production.
Statoil expects to keep sending oil by rail to the Atlantic and Pacific coasts, where prices are higher than at Cushing, Oklahoma, the delivery point for the U.S. benchmark West Texas Intermediate.
Brent crude traded in London settled at a $22.52-a-barrel premium to WTI yesterday, the highest since Oct. 20, 2011. It costs $8 to $11 a barrel to ship crude by rail to the coasts, Maloney said.
“Not only are we reaching better markets, but what we’re taking out of the Bakken is increasing local prices,” Hole said.
Bakken oil on the spot market in Clearbrook, Minnesota, sold at a $2.50 premium to WTI at 8:51 a.m. in New York, above the one-year average of a $5.10 discount, according to data compiled by Bloomberg.
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