February 2, 2015 / 11:49 PM / 2 years ago

No Canadian crude by rail to California in August-November 2014: state

3 Min Read

HOUSTON (Reuters) - Canadian crude shipments via train to California dropped to zero for at least four months last year as global oil prices plunged, data from the California Energy Commission show.

The California Energy Commission on Monday released its latest data of crude movements into the state via rail, which showed no Canadian crude shipments arrived from August to November, down from a high of 267,624 barrels in May - or 8,633 barrels per day (bpd).

Moving crude via rail is profitable when the cargo's discount to U.S. crude futures is wide enough to more than cover the higher transportation costs. Those discounts have narrowed as crude prices fell sharply since June on global oversupply.

On Monday, Western Canada Select heavy crude traded at a $12 per barrel under the West Texas Intermediate benchmark, its narrowest discount since June 2013.

"The numbers don't work," said David Hackett, president of Stillwater Associates, a refining and petroleum logistics consultancy in Irvine.

The data also show rail shipments of North Dakota Bakken shale oil seesawed over the same four months, bringing in 3,900 bpd in August and October, but 2,000 to 2,100 bpd in September and November.

Rail shipments of crude from New Mexico, Utah and Wyoming rose over the same period, though at volumes ranging from 3,300 bpd to 4,700 bpd.

Volumes of crude railed to California are small compared to operations like Kinder Morgan Inc's (KMI.N) 201,000 bpd crude rail operation on the Houston Ship Channel. Overall, the state received 14,393 bpd of railed-in crude in November, 28 percent less than the high of 20,074 bpd in May, the CEC data showed.

Hackett noted that California has few crude offloading operations that can handle "unit trains," or mile-long, 100-car trains that only move oil.

Most oil shipments arrive in California on mixed-freight trains - or manifest - that have more stops to unload or add other cargo and are therefore more costly than unit trains, Hackett noted.

Reporting by Kristen Hays; Editing by Phil Berlowitz

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