Plains All American expects to form a far-reaching crude system in California to distribute light and heavy crudes from its proposed Bakersfield rail unloading terminal, executives said Tuesday.
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Plains plans to integrate its existing California crude oil pipelines with the crude-by-rail facility, located about 100 miles north of Los Angeles, after its startup in mid-2014, they said during a third quarter earnings call.
"Our rail unloading facility will feed the headwaters of our pipeline distribution system into California," CEO Greg Armstrong said.
From the Bakersfield terminal, Plains pipelines may eventually be able to transport about two unit trains worth of crude per day to both the Los Angeles and San Francisco refining markets, he said.
The midstream company is "working hard not only to raise our ability to unload more railcars at Bakersfield beyond one unit train, but also to expand" takeaway pipelines, Armstrong said.
For the West Coast distribution project, Plains will increase the capacity on some of its regional pipelines, perform integrity work on its Line 63 crude pipeline and activate pipelines that are currently inactive, managers said on the call.
Plains owns the All American Pipeline System in California, which interconnects with its Line 63 pipeline. The line historically transports crude oil produced in the San Joaquin Valley and the outer continental shelf offshore of California to refineries and terminal facilities in the Los Angeles Basin and Bakersfield, according to an annual filing Plains made with the US Securities and Exchange Commission earlier this year. Line 63 also has about 1 million barrels of storage capacity, the filing said.
Volumes shipped from the Outer Continental Shelf are in decline, the company said in the filing.
During the third quarter, Line 63's average throughput was 113,000 b/d, down from about 130,000 b/d in the year-ago quarter, Plains said in an earnings statement.
The crude from Bakersfield will be used to fill "some slack in our existing pipelines," Armstrong said.
Harry Pefanis, Plains' president and chief operating officer, said during the call that the Bakersfield crude-by-rail terminal is currently permitted to facilitate a unit train a day, or about 65,000-70,000 b/d, when it starts up. Permits have been filed to double that loading amount, he said.
"Ultimately, we are going to bring in light and heavy [crude], but initially it will be more lighter crudes and a unit train per day type of volume," Pefanis said.
Turning to other infrastructure projects, Pefanis said a crude-by-rail loading facility in Tampa, Colorado, will go into service this month, while a Yorktown, Virginia, unloading facility will start up next month.
The company is also developing a crude-by-rail facility in Canada, which is expected to be in service in the first quarter of 2015, Pefanis said without giving any more details.
Like Plains, many midstream developers and refiners have expressed interest in sending crude by rail and barge to the US West Coast. Refiners there are noticing production declines of historically processed crudes like benchmark Alaska North Slope, sources have said.
Phillips 66 CEO Greg Garland said last week in that company's quarterly earnings call that it plans to expand its crude-by-rail capabilities to allow its West Coast refineries to receive shale oil from the Bakken in North Dakota and the Eagle Ford in South Texas.
In a third-quarter earnings statement, Phillips 66 said it has received permits for a rail offloading facility at its refinery in Ferndale, Washington. The facility is expected to have the ability to offload 30,000 b/d of crude by 2014, it said.