While EIA currently does not collect data on domestic movements of crude oil and products by rail, an examination of EIA data reveals that there is a growing supply of crude to the West Coast (PADD 5) that is not explicitly accounted for by production, imports, or movements from other PADDs via pipeline, tanker or barge (Figure 1). Based on data and information published by the California Energy Commission and on information published by U.S. West Coast refiners on crude volumes moving by rail, a significant portion of this growing unaccounted-for crude is delivered via railroad to West Coast refineries. Through July of this year (the latest data available) PADD 5 unaccounted-for supply has averaged 191,000 barrels per day (bbl/d), representing nearly 8% of regional supply.
Through 2011, the 15-year average unaccounted-for crude supply was 24,000 barrels per day (bbl/d), meaning that crude supply and demand were more or less evenly balanced. During that time, PADD 5 refinery runs averaged 2.4 million bbl/d and unaccounted-for supply was 1% of demand. However, the average unaccounted-for supply rose to 59,000 bbl/d in 2012 and reached 113,000 bbl/d in 2013, representing 3% and 5% of demand, respectively.
Publicly available information, e.g. U.S. Securities and Exchange Commission (SEC) filings, confirms that crude-by-rail movements to the West Coast have increased. In June, Tacoma Rail, a shortline railroad that is operated as a public utility and owned by the city of Tacoma, reported to the state that it moved three trains of Bakken crude a week, totaling between 27,000 and 36,000 bbl/d for the month to refineries in Washington. BNSF Railway in a disclosure on crude-by-rail movements transiting the state of Washington has indicated movements of 50,000 bbl/d to as much as 100,000 bbl/d. According to BNSF's website, they can move crude to eight facilities in PADD 5 including Fidalgo, Arco, Tacoma and Port Westward in Washington, and Sacramento, Richmond and Bakersfield in California, with additional sites under development in both states. Tesoro's SEC Form 10-Q filing for the period ending June 30, 2014 reports acquiring a rail loading and unloading facility, and four storage tanks with a shell capacity of approximately 1.5 million barrels located at its refinery in Anacortes, Washington and a truck terminal and rail loading and unloading facility at its Martinez, California refinery. According to data from the California Energy Commission, 2014 crude receipts by rail have averaged 17,000 bbl/d through July, with roughly 40% coming from Canada.
As PADD 5 rail receipts of crude oil increase, other West Coast crude supply dynamics are changing (Figure 2). While total U.S. crude production has increased significantly in recent years, PADD 5 output has declined. Driven primarily by decreasing Alaskan production, PADD 5 output has fallen by 225,000 bbl/d since 2008 and has averaged 1.1 million bbl/d so far this year. As Alaskan production declines, Washington and California receive less supply from the state. Through July of this year, Alaskan shipments to Washington and California are 122,000 bbl/d and 60,000 bbl/d lower than 2008 averages, respectively. Given this trend, other sources of supply, primarily other domestic sources, have become more important.
West Coast crude imports have also declined, but not by as much as production. After reaching a peak of 1.2 million bbl/d in 2008, PADD 5 imports fell more than 100,000 bbl/d to 1.1 million bbl/d in 2013 and have remained in that range so far in 2014. The crude quality mix of imports has shifted slightly as the overall volume has decreased. API gravity of imports has not changed significantly, with heavy barrels (API gravity less than 35) still comprising approximately 80% of imports. But the sulfur content of imports has increased, with sour barrels accounting for 80% of imports so far in 2014, up from 66% in 2010. Heavy sour barrels (with API gravity less than 35 degrees and sulfur greater than or equal to 0.5%) accounted for 63% of regional imports in 2013, up from 53% in 2010. Refineries can blend the heavy, sour imports with the light, sweet barrels from the Bakken to get a crude blend that is similar in quality to Alaska North Slope crude oil.
With no pipelines available to move crude oil to the West Coast from other parts of the country, crude by rail is likely to remain a viable transportation option for market participants to move Midcontinent crude oil production to PADD refineries, as long as Midcontinent crude prices remain relatively attractive.
GASOLINE PRICE CHANGES MIXED, DIESEL FUEL PRICES DECREASE
The U.S. average price for regular gasoline as of September 29, 2014, was unchanged from a week ago but seven cents lower than the same time last year, at $3.35 per gallon. The Rocky Mountain price declined five cents to $3.49 per gallon, while the West Coast decreased four cents to $3.65 per gallon. The East Coast price declined one cent to $3.34 per gallon. The Gulf Coast price increased three cents to $3.16 per gallon, and the Midwest price rose two cents to $3.30 per gallon.
Average U.S. diesel fuel prices decreased two cents this week to $3.76 per gallon, 16 cents lower than the same time last year. Diesel fuel prices in all regions of the country decreased, with the largest declines in the Rocky Mountains and West Coast, down four cents each to $3.81 per gallon and $3.95 per gallon, respectively. The East Coast price fell three cents to $3.78 per gallon, the Midwest price decreased two cents to $3.69 per gallon, and the Gulf Coast price fell one cent to $3.69 per gallon.
PROPANE INVENTORIES RISE
U.S. propane stocks increased by 0.4 million barrels last week to 79.6 million barrels as of September 26, 2014, 12.5 million barrels (18.7%) higher than a year ago. Gulf Coast inventories increased by 0.3 million barrels and East Coast inventories increased by 0.2 million barrels. Rocky Mountain/West Coast inventories and Midwest inventories both remained unchanged. Propylene non-fuel-use inventories represented 3.6% of total propane inventories.
Source: U.S. Energy Information Administration