(Billings, MT – YPR) – Burlington Northern Santa Fe (BNSF) officials say the railroad is keeping pace with the rapid growth caused by the Bakken Formation, the largest oil field in the lower 48 states.
The lack of pipeline capacity has led oil producers to turn to rail and semi trucks to bring crude from fields in western North Dakota and eastern Montana to market.
BNSF recently announced it has increased capacity to haul one million barrels of crude per day out of the region, known as the Williston Basin.
“Yeah, it’s fun isn’t it,” says Denis Smith, BNSF Vice President of Marketing of Industrial Products. "Three years ago there was one facility that could load a crude petroleum train up there. Now we’re going to have 10 by the end of the year and a dozen by next year. " These terminals load oil onto 100 car trains.
He says customers have spent about $1 billion on these loading facilities, rail cars, and other infrastructure. In turn, Smith says the railroad has had to make sure it had the capacity to move those trains to market.
“It’s about a dozen trains,” Smith says. “And it is impressive, but if you put it in light of something like our coal business where we haul 50-plus trains a day, we’re capable of doing it.”
According to a BNSF press release, the railroad’s network reaches all major coastal and inland markets and directly serves 30 percent of US refineries in 14 states through direct and interline service. The company has 1,000 miles of rail line in the Williston Basin area, serving eight originating terminals. BNSF also connects to 16 of the top 19 oil producing counties in central and western North Dakota and five of the six oil producing counties in eastern Montana.
The railroad recently announced it spent $197 million on projects in North Dakota and Montana. The company also hired more than 560 new employees across its service area.
Smith anticipates BNSF will continue to be a key transporter of Bakken/Williston Basin crude even if the proposed Keystone XL pipeline is constructed from Canada to the US Gulf Coast. The pipeline is primarily to transport Canadian tar sands crude to the US for refining, but on-ramps are planned in Montana to also transport Bakken crude.
“We go to the Texas/Louisiana gulf but some of the other markets are better markets for producers up there [ND/MT],” Smith says. As an example, he says rail can deliver crude directly to markets in Philadelphia, Chicago, Florida, and the Pacific Northwest. “That’s the beauty and the surprise I think to the producers,” he says. “The reach that we have in terms of getting them to markets that give them the best buck for their oil.”
(Billings, Montana – YPR) – MontanaFair, the region’s largest fair, celebrates the state’s agricultural tradition with people competing to win the purple Best of Show ribbon for wool, pigs, and apple pie. But this year, MontanaFair is also celebrating the importance of the region’s energy industry – oil, gas and coal.
Eastern Montana and Western North Dakota are home to one of the country’s most active oil fields, the Bakken.
The energy exhibits are being held in a building between the mechanical bull ride and the Montana State University Extension Service agricultural and garden demonstration plots.
Event organizer Dana Pulis says Energy Day wants to celebrate Montana’s agricultural heritage and recognize another key industry. “We’re doing business with some of the biggest corporations in energy development while we’re wearing jeans, while we’re in a 100-year-old barn, and while we’re enjoying ice cream and hot apple pie.” Pulis says.
Several companies brought working oil field equipment for public display. Alan Olson of Sanjel Corporation brought what’s known as “the blender.” This 73-foot long truck mixes the hydraulic fracturing – or fracking - fluid and sand. Olson says once MontanaFair is over, this unit is headed for Texas.
A horsepower unit injects the fluid into the wells.
Texas license plates are common in Billings because of the Bakken oil boom. When Olson is asked if Montana is the new Texas: "When you go down and look at our operations in Texas, all of our equipment down there has Montana license plates," he says. "So Texas is the new Montana."
This oil field services truck by Cliffhanger, LLC heats up water. “This is a spectacular piece of equipment, says Olson. “We’ve got to heat up water in the wintertime. You can’t frack or cement with ice cubes.”
Sanjel and Nabors Well Services, the world’s largest on-shore drilling company, are among those also looking at fairgoers as potential employees.
“We’re looking for truck drivers,” says Russ Burch of Billings. The human resources district manager oversees hiring for Montana, North Dakota, Wyoming, Colorado, and Utah. “I need to hire about 40 of them [truck drivers] to work rotations for us in North Dakota.”
The catch, he says, is they need to be experienced in winter driving -- and willing to put on chains in below-zero temperatures with strong winds.
(Glendive, MT – YPR) – A company that provides drilling fluids for the oil industry says transportation is the reason why it chose to locate its Bakken Oil operations in a small Eastern Montana community.
“We depend so much on trucking,” says Joe Bowen, area manager of The Mud Master’s Group. “That’s the only reason why we’re not in Billings.” He says four to five semi trucks a day, loaded with Mud Master products, leaves the Glendive facility daily for the Bakken oil fields.
Mud Masters provides drilling mud and other products. The company has facilities in Texas, Louisiana Oklahome, West Virginia, and now Montana. The Bakken oil fields in Eastern Montana and Western North Dakota is the secondlargest oil play in the U.S.
Bowen says he had to convince his bosses to locate a facility in Glendive over Billings. According to the 2010 census, the population of the city of Glendive is 4,935 people, while the population of the city of Billings (the state’s largest city) is 104,180 people.
“I considered Billings hard,” says Bowen who still has a home in Billings, as well as in Glendive. “I lived in Billings when Mud Masters wanted to expand into North Dakota. I wouldn’t live in North Dakota. I’m from Montana. I live in Montana.”
“I’m just as close in Glendive to every drilling rig in the Bakken as a business in Williston, North Dakota is,” he says.
To illustrate his point, Bowen draws an equilateral triangle on the chalkboard in his Glendive office. At each point, he writes: Glendive, Williston, and Dickinson; on each line he writes 98 miles. By contrast, Billings is another 220 miles to the West of Glendive or at least 3 ½ hours of driving time on I-94.
“By the time a truck leaves Billings and comes to the Bakken and delivers, before the driver can get home he runs out of time,” Bowen says. The distance from Billings to Williston is about 320 miles or just over 5 hours via I-94. Then there’s additional time and distance to the drilling rigs that dot the oil fields.
Bowen says Billings has the infrastructure, housing, shopping and other amenities that the smaller communities of Glendive and other Eastern Montana communities don’t. “But we depend so much on trucking,” he says. “That’s the only reason we’re not in Billings.”
Bowen says Billings remains vital to his company, however, because of its airport. The Glendive office has eight full-time employees who live in the area, he says. The remaining 10 rotate in and out from Texas, Louisiana, Louisiana and Pennsylvania. All will fly into Billings and either drive or board Silver Airways (provided by Gulfstream International Airlines), the Essential Air Service provider to rural Montana.
(Billings, MT – YPR) – Railroads are benefiting from the drilling boom in the Bakken Oil Formation. The region encompasses southern Canada bordering portions of Eastern Montana and Western North Dakota.
Denis Smith is vice president of marketing for industrial products for Burlington Northern Santa Fe Railway (BNSF). He says railroads have a long history of hauling crude petroleum, including from the Bakken, “but at this scale and at this volume, that’s what makes it unique and different and very exciting,” he says.
Smith says BNSF’s increase in traffic isn't just from hauling crude petroleum from the oil wells in the Bakken and surrounding Williston Basin. He says these wells also need deliveries of drilling supplies like sand, pipe, and other heavy materials. He says the shortage of semi trucks and drivers and the current lack of pipeline capacity means companies are turning to railroads.
He says to accommodate the increase of drilling activity, BNSF has been laying new sections of track for its customers from its main line to the terminals to accommodate these shipments.
“So if anyone is spending a lot of money right here, right now on track and capacity it’s the customer,” Smith says. He says customers are also having to buy rail cars.
TransCanada has proposed building the Keystone X-L pipeline that is to originate at the tar sand oil fields in Alberta Canada and extend to refineries and distribution terminals along the Gulf Coast in Texas. The pipeline was also expected to pick up crude from the Bakken.
The Obama Administration announced earlier this month a decision on a permit will be delayed as the U.S. State Department considers an alternate pipeline route. Originally, a decision was anticipated by the end of 2011.
In the meantime, Smith says oil companies continue to rely on rail to transport crude to market. Even if the Keystone X-L project is approved and permitted, it will take time to construct the nearly 2,000 mile long pipeline. “Rail is the most immediate and quickest way to get the oil to the marketplace at the moment,” Smith says.
He adds rail is also more flexible. He says a pipeline is point-to-point while BNSF transports crude to multiple locations from the Bakken. This includes to refineries and distribution and storage terminals in Oklahoma, Texas, Louisiana, California, and to the East Coast.
That’s why Smith says BNSF expects to have a continued role in the Bakken even if the Keystone X-L pipeline is approved and operating.
“Theoretically, technically, mathematically it will take away a lot more barrels than are currently going, but we feel that on the rail-side we’ll have a solid 20-25 percent of the daily production up there (Bakken) move by rail,” he says.
BNSF is not the only railroad that’s seeing an increase in its rail traffic. The Calgary Herald reports Canadian Pacific is also increasing its investment because of the Bakken oil boom, as are other rail lines.