BNSF CEO says oil-by-rail shipments continue to help Bakken development

2012-10-17T18:03:00Z 2012-10-18T11:20:05Z BNSF CEO says oil-by-rail shipments continue to help Bakken developmentBy TOM HOWARD The Billings Gazette

Burlington Northern Santa Fe Railroad will continue shipping millions of barrels of crude oil from the prolific Bakken oil play even if the proposed Keystone XL pipeline is built, BNSF’s chief executive said Wednesday in Billings.

Speaking during the annual meeting of Big Sky Economic Development, Matthew Rose said BNSF has already invested billions of dollars in new locomotives, tank cars and track improvements to ship oil from the Bakken field that spans western North Dakota and Eastern Montana.

BNSF’s oil shipments out of the Bakken have grown exponentially, from 1.3 million barrels in 2008 to 90 million barrels in 2012. Thirty-five facilities for unloading crude oil from trains are under development in several states, and that will lead to even more shipments, Rose said.

Likewise, the railroad is shipping more freight into the Bakken area. Sand used in hydraulic fracturing is in big demand, as well as other products such as lumber used to build new houses, Rose said.

BNSF’s big investment in oil hauling resulted from a shortage of pipeline capacity that has constrained oil shipments out of the Bakken.

The Keystone XL pipeline is designed to ship oil from Canada through the Midwest and to refineries along the Gulf Coast. The pipeline would extend through Eastern Montana. At the insistence of Montana leaders, the line would include a 100,000 barrel-per-day on-ramp that would allow shipments of local crude.

Rose said hauling crude by train has some advantages because the rail network allows for more flexibility in what routes on which the oil can be shipped.

“Hauling crude by rail will be around for a while,” even if the pipeline is built, Rose said.

Last month BNSF announced that it would spend $1.1 billion on locomotives, freight cars and related equipment to boost its crude-shipping capacity from the Bakken.

Oil shipments out of the Bakken have helped BNSF make up for a decline in coal shipments. A sluggish national economy and competition from low-cost natural gas have reduced demand for coal-fired electricity in the United States. Through the end of September, coal shipments were down 17 percent compared to the same period last year, according to Reuters.

“BNSF has done a terrific job in helping to develop the Bakken,” said Sen. Max Baucus, D-Mont., who also offered his congratulations to Big Sky Economic Development.

Baucus said he’s hopeful that Montana coal exports will receive a boost if proposed expansions of West Coast coal terminals are approved.

“I see a great future for our state with the development of coal, oil and renewables. We have a huge opportunity to create more jobs,” Baucus said.

Speaking of coal, Rose took issue with a study that predicted up to 60 trains a day going through Billings and other cities if port expansions lead to a big increase in coal exports.

“We’re talking about eight and 14 trains a day, and not necessarily all of them would go through Billings,” Rose said.

He said the development of the Otter Creek coal tracts in Eastern Montana would create 2,500 construction jobs and about 1,800 permanent jobs.

“I come before you as somebody who lives in Texas, and it’s not up to us whether these reserves are developed. This is up to the citizens of this state,” Rose said.  

More than 300 attended Wednesday's meeting. It marks the 10thanniversary of the Big Sky Economic Development Corp., the investor-financed arm of Big Sky Economic Development, Yellowstone County’s economic development agency. BSED’s 120 member investors supplement efforts of the taxpayer-funded agency.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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