UPDATE 1-Kansas City Southern expects growth in crude-by-rail to Texas

Fri Jul 19, 2013 12:02pm EDT
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* Railroad remains in talks for rail terminal in Port Arthur, TX

* For now, KCS can rail crude to new Port of Beaumont facility

By Kristen Hays

HOUSTON, July 19 (Reuters) - Kansas City Southern expects its movement of crude by rail to Texas to grow, and remains committed to building a new crude terminal in Port Arthur once permits are approved, executives told analysts on Friday.

The railroad now moves up to two trains of crude per week to southeast Texas, and that will increase as a separate new oil terminal at the Port of Beaumont adds storage tanks to complement rail unloading facilities there.

The executives said the railroad's loop track to those facilities connecting to its main line was finished earlier this week, and will be able to handle a 120-car crude train per day once the additional storage capacity is built.

That is in addition to Kansas City Southern's plan to start its own crude terminal operation in Port Arthur, Chief Executive David Starling told the analysts, during the company's second-quarter earnings conference call on Friday.

Kansas City Southern originally planned the facility in Port Arthur - home to three major refineries, including Motiva Enterprises' 600,000 barrels-per-day (bpd) plant, the largest in the United States - with Savage Companies, a privately held logistics and supply chain firm.

That plan fell through, but the railroad is in talks with an undisclosed "potential partner" to build a crude terminal that could take trains moving crude from Canada as well as North Dakota's Bakken shale oil play, Starling said.   Continued...