Crude by Rail
United Energy Trading established a strategic relationship with U.S. Development Group, the premier rail logistics and destination operator in the country. We entered into an agreement to transport Bakken crude oil to St James, Louisiana, establishing ourselves as the first company to commit to railing North Dakota crude oil to the Gulf Coast. This decision, which came about from extensive in-house knowledge of this premium market, has proven to be the best business decision we have made in our crude oil marketing activities. Beyond this, and nearly as important, we leased a large fleet of rail cars for multiple years at attractive rates.
Also providing UET a competitive advantage in this space is the fact that we are now one of the most experienced third party crude-by-rail shipper in the country. Our scheduling staff has worked intimately with railroads, origin and destination terminals for over five years. Our back office staff has developed the requisite processes and systems to crisply and efficiently manage the settlement process. Our experience and longevity in relationships with class-one railroads allows us to expedite resolution of rail congestion and scheduling issues in a prompt an advantageous manner. Collectively, all of these features bring best-of-breed management to this space, creating value for our supply and market customers.
Today, our crude-by-rail program that started in August 2010 at 5,000 barrels per day from a single rail loading site has grown into one of the largest operations of its kind in the country. United Energy Trading now ships crude oil from loading sites in the Williston Basin, Western Canada, DJ Basin, Permian Basin, Powder River and Eagle Ford Shale areas – to several destinations on the Gulf Coast, West Coast and Northeast U.S.
Markets: As UET’s presence in crude by rail has grown and deepened, major refiners have approached UET to be their supply transporter-of-choice for crude oil from various shale basins. UET is currently negotiating with several of these refiners for multi-year supply contracts involving shale oil from multiple shale oil basins throughout the country to multiple refineries across the country. Our goal for UET is to remain as one of the most efficient crude-by-rail shippers in the United States. We have proven that this mode of transportation not only is feasible, but is also critical to the successful development of crude oil production in domestic shale basins. Initially seen as just a bridge facilitating additional drilling until pipelines reach constrained basins, crude-by-rail will be integral to crude transportation for years to come. UET has been, and will continue to be, at the forefront in optimizing this mode of transportation into what we believe will be the preferred method of access to niche and option-based markets.