Global, Kansas City Southern to build Port Arthur crude oil rail terminal

Platts | July 8, 2014 | Column by Esa Ramasamy and Beth Evans

A new Port Arthur, Texas, unit train terminal is being planned to ship heavy sour crudes from Western Canada to the US Gulf Coast refining hub.

Project partners Global Partners and Kansas City Southern said Tuesday that the terminal, which does not have a firm start date yet pending regulatory approvals, will initially handle two unit trains a day and have 340,000 barrels of oil storage.

Unit trains have up to 120 rail cars with the capacity to haul up to 72,000 barrels of oil. US refiners have shown a preference recently for Western Canadian heavy sour crudes shipped by rail because of their low diluent content, ranging from close to zero up to 5% diluent.

Canadian heavy sour crude shipments by pipeline require up to 15% diluent in the summer months and up to 33% diluent in winter.

In addition, because the US has permitted re-exports of Canadian crudes, potential exporters of Canadian crudes prefer to export crudes received by rail because of the zero potential of commingling with US domestic crudes.

The US permits the re-export of Canadian crudes from US locations provided it is not commingled or blended with domestic US crudes.

"Situated within a 100-mile radius of nearly 5 million barrels of Gulf Coast refining capacity and an expansive pipeline network, Port Arthur is a prime destination for crude and refined products," Global CEO and President Eric Slifka said.

Crude supplies to the region are growing. Nederland/Port Arthur is where TransCanada's 590,000 b/d Marketlink oil pipeline ends. There is also more crude expected to come into the region once the 450,000 b/d Seaway loop pipeline starts up sometime in the third or fourth quarter to take crude from Cushing, Oklahoma, to the Jones Creek terminal in Freeport, Texas. From there, it will connect to Enterprise's ECHO crude storage facility in Houston and then to a new pipeline from ECHO to the Beaumont/Port Arthur area.

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PAUSE, People of Albany United for Safe Energy
PAUSE is a grassroots group of individuals who have come together to promote safe, sustainable energy and fight for environmental justice. We engage the greater public to stop the fossil fuel industry’s assault on the people of Albany and our environment.