Phillips 66 announced earlier this month that it signed a five-year contract with Global Partners for the fuel wholesaler to use its rail transloading, logistics and transportation system to deliver crude oil from the Bakken region of North Dakota to the Phillips refinery in Elizabeth, N.J.
The Bayway refinery at the Port of New York and New Jersey processes foreign crude delivered by oil tankers, but is adding rail capacity to take advantage of lower cost petroleum produced through hydraulic fracturing of underground shale deposits in the Bakken. Many coastal refineries are now adding capacity to receive unit trains of shale oil (see the feature story "Steel Wheeled Pipeline
" in the January issue to learn more about the logistics activities underway to support U.S. drilling in shale fields).
Houston-based Phillips has committed to buy about 91 million barrels of crude oil during the contract term, or about 50,000 barrels per day. It said the deliveries are cost-competitive with traditional supplies.
The Bayway facility has a published capacity of 238,000 barrels per day.
The oil will be transported by railroad to Global's facility in Albany, N.Y., and then transloaded to barge for final delivery to Elizabeth, Phillips 66 spokesman Dennis Nuss said. - Eric Kulisch