In many parts of the country, drivers frequently encounter road construction and a sign that says "New Traffic Patterns" as highway infrastructure shifts. New traffic patterns are emerging also in crude oil movements.
There has been much discussion about the resurgence in U.S. crude oil production and the resulting abundance of crude in the Midcontinent (PADD 2 and PADD 4) and the Gulf Coast (PADD 3).
On the West Coast (PADD 5), however, crude oil production has been declining, especially in Alaska and California, and as a result, crude oil supply patterns to West Coast refineries have been changing. Currently, there are no major pipelines moving crude to the West Coast from east of the Rockies. Marine transport to the West Coast involves a lengthy and expensive trip from the U.S. Gulf Coast through the Panama Canal.
Crude-by-rail, though, is becoming a viable alternative. Trade press and company reports indicate that crude-by-rail infrastructure on the West Coast has been expanding, with more planned. Further, while EIA currently does not collect data on domestic movements of crude oil and products on railroads, an examination of EIA data reveals that there is a growing supply of crude to PADD 5 that is not explicitly accounted for by production, imports, or other transfers. This unaccounted-for crude is likely crude oil delivered via railroad to refineries on the West Coast.
Figure 1 illustrates unaccounted-for supply as the difference between PADD 5 refinery runs and stock change and the sum of imports, Alaska production, and other PADD 5 production. Before 2012, the data show a slight unaccounted-for supply, in the range of -20,000 (overestimation) to 70,000 (underestimation) barrels per day (bbl/d) (Figure 1). Underestimation of supply can be interpreted as domestically produced crude oil shipped to PADD 5 from other PADDs via modes of transport not captured in EIA surveys, mainly railroad and truck. Beginning in 2012, the underestimated crude supply increased significantly, reaching more than 100,000 bbl/d in the early months of 2013. This unaccounted-for supply is likely crude delivered via rail.
The interpretation of unaccounted-for supply as an increase in rail shipments is consistent with trade press reports. The refining center in Washington state, the closest destination for both Canadian and Bakken crudes, is where most of the refineries have built or are in the process of building rail unloading facilities. Tesoro, the largest refiner on the West Coast, opened a 40,000-bbl/d crude-by-rail unloading facility at its Anacortes, Washington, refinery complex in 2012. The U.S. Oil & Refining Company's Tacoma, Washington, refinery was the latest to open a similar-sized crude-by-rail unloading operation in Washington. Tesoro is also in the process of securing approval for a 120,000-bbl/d rail-to-barge terminal in Vancouver, Washington. Alon USA Energy and Valero are in the process of expanding facilities and securing approval to build new crude-by-rail unloading facilities at their California refineries.