UPDATE 2-Phillips 66 makes $1 bln commitment to ship Bakken crude
* Phillips commits to move 50,000 bpd Bakken oil to NJ
* 5-yr commitment the longest crude-by-rail deal so far
* Global to ship crude via Canadian Pacific's railway
By Selam Gebrekidan
NEW YORK, Jan 8 (Reuters) - Phillips 66 said on Tuesday it entered a five-year commitment to ship North Dakotan crude oil by rail to its New Jersey refinery, making an estimated $1 billion bet that North American crude will remain cheap.
Under the terms of the contract to use Global Partner LP's loading facilities and terminals, Phillips 66 will receive some 50,000 barrel-per-day of Bakken crude oil at its 238,000 bpd Bayway refinery in Linden, New Jersey, on a take-or-pay basis, equal to 91 million barrels over the five-year period.
Global LP said it will load the Bakken crude shipments at Basin Transload LLC's rail facilities in North Dakota and ship it to its terminal in Albany, New York, on Canadian Pacific's rail network.
The Houston, Texas-based refiner's commitment only covers a fraction of the cost of moving oil by rail. Phillips must also pay the train operators that transport the crude as well as cover the cost of buying or leasing tank cars.
Oil traders estimate it costs between $12 to $16 a barrel to transport Bakken crude from North Dakota to the U.S. Northeast. Even if long-term agreements resulted in some discounts, the total commitment Phillips 66 is making to move Bakken crude likely exceeds $1 billion. Continued...