With pipelines to terminals in short supply, North Dakota crude is moving by rail.


Over the past month, at defunct oil refineries, industrial facilities and other brownfields on the East Coast, construction work has been accelerating to convert these sites into rail terminals to take crude oil from North Dakota's Bakken shale formation.

The boomlet is gaining momentum. In Eddystone, Pa., Enbridge is turning the site of a shuttered coal plant into a rail terminal able to take delivery of about 80,000 barrels of oil per day by this fall; it will take about 100 construction workers to complete the job. Instead of closing a South Philadelphia refinery as planned, Sunoco is building a high-speed-rail loading facility. PBF Energy, Parsippany, N.J., recently completed a rail terminal that will take delivery of about 80,000 barrels of oil per day (bpd) of Bakken and Canadian crude.

"There is no pipeline to the East Coast," says Michael Karlovich, PBF Energy spokesman. "So, rail is the option. Savage Services [based in Salt Lake City] built the track and is handling loading and unloading services at our Delaware City, Del., refinery." The project should add an additional 40,000 bpd of heavy-crude unloading capability to the existing 40,000 bpd rail facility, PBF Energy said. Estimated at $50 million, the project is set for year-end completion.

Carbis Inc., Florence, S.C., a design-builder and equipment provider for transloading applications, says there is abundant contracting work in this sector because refiners and distributors are willing to spend heavily to get on the bonanza of low-cost Bakken crude, which can cost $20 per barrel less than the Nigerian crude relied upon by East Coast refiners. "A true crude-by-rail oil terminal costs about $70 million," says Pete Singleton, Carbis vice president of business operations. "That's loading and unloading, fall protection, pipes and hoses, storage tanks, loop tracks, spill containment and spurs."

The company provides turnkey services for new rail loading facilities, from pipe bridges and loading racks to tank truck platforms, crossover units and even foundation design. Both Carbis and Savage Services design and fabricate much of the equipment and are looking for contractors with multiple skills to handle the whole job. Kent Avery, vice president of business development for Savage Services, notes, "We want sort of a one-stop shop," meaning a team of contractors that have experience with both rail and petrochemical applications: foundations, pipelines, tracks. "We don't want to hire a different contractor for every discipline we need."

Avery says most of the work involves traditional construction methods and techniques, but every job is custom-made. "The design and construction needs of each project is different," he says. The biggest challenge at the moment is space, Avery says. In 2011, Savage built a rail spur and loop track to load 120-car unit trains in North Dakota—that facility occupies 270 acres.

Although the Philadelphia area is the hot spot for East Coast terminal work for Bakken crude, dozens of other projects are under way at ports in Texas, Louisiana and California.