Phillips 66 seeks permit for facility to receive crude by rail

Wed Apr 3, 2013 6:26pm EDT
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By Kristen Hays

HOUSTON (Reuters) - Phillips 66 (PSX.N: Quote) is seeking a permit to build an offloading facility at its Washington State refinery to increase rail shipments of cheap inland U.S. and heavy Canadian crude.

The permit application, filed this week with Washington's air pollution regulator, came as crude-by-rail has gained scrutiny because of two derailments of Canadian Pacific Railway (CP.TO: Quote) trains where cars carrying crude leaked.

One of those derailments occurred on Wednesday morning in northern Ontario, where two of 20 cars that went off the tracks leaked crude oil. CP said the oil was contained.

The other occurred a week ago in Minnesota when 14 cars derailed, spilling nearly 15,000 gallons of Canadian crude. The Minnesota spill is under investigation by federal officials.

Last week's accident was the first major spill of crude transported by rail since booming North American oil production prompted a huge rise in moving crude by rail because pipelines' capacity has yet to catch up with demand.

Both were mixed freight trains, with a portion of the cars carrying crude oil. Phillips 66 is seeking to build a facility that can accommodate 100-car "unit trains," or trains that carry a single cargo - in this case, crude oil.

Phillips 66 spokesman Rich Johnson said the company's proposed rail facility will be able to offload 30,000 barrels per day.

A 100-car unit train can carry 69,000 to 81,000 barrels of crude, according to a recent report by Deutsche Bank, but all cars don't necessarily have to be offloaded in a single day.   Continued...