November 20, 2014 / 10:15 PM / 3 years ago

UPDATE 2-CSX warns Buffalo snow may cause delays on main crude oil route

(Adds Norfolk Southern shipment halt, details on rail terminals)

By Jarrett Renshaw

NEW YORK, Nov 20 (Reuters) - CSX Corp warned customers on Thursday that a massive snowstorm in Buffalo, New York, may cause delays of up to 48 hours on deliveries along its main crude oil by rail route.

“Customers with shipments over the high-volume Buffalo line should continue to expect delays up to 48 hours,” the company said in a customer service advisory.

Norfolk Southern issued an embargo on Wednesday on all shipments running through Buffalo, prompting Union Pacific to do the same, according to a customer advisory notice published online.

The CSX line carries crude from Chicago to Albany, New York, where it is loaded onto ships that sail to Irving’s refinery in Saint John, in New Brunswick, Canada, or taken to refineries in the Philadelphia area. It passes through Buffalo, which is digging out of more than five feet of snow, with more falling on Thursday.

Many trains bypass Albany and head south along the River Line to Phillips 66’s 238,000-barrel-per-day refinery in Linden, New Jersey or Philadelphia Energy’s Solutions 335,000-bpd refinery in Philadelphia, along with others in the region.

Many East Coast refineries have built new offloading rail terminals as they have become increasingly reliant on Bakken crude oil from North Dakota. [id: nL1N0SX2KA]

Philadelphia Energy Solutions’ rail terminal can handle up to 210,000-bpd, while the terminal at the Linden refinery handles up to 165,000-bpd. Both facilities are served by CSX.

A rail industry source said that any East Coast refiner that relies exclusively on CSX is going to need to look at other options for securing a crude oil source during the disruption.

The refineries have been hurt by delays caused by congestion and bad weather before.

Monroe Energy, a subsidiary of Delta Air Lines Inc., said rail congestion left them short 1 million barrels of crude oil over the summer, and the refinery was forced to limit production last week because of a shortage of crude supply.

Phillips 66 spokesman Dennis Nuss declined to comment. Monroe Energy and Philadelphia Energy Solutions did not immediately respond to requests for comment.

Rob Doolittle, a CSX spokesman, said trains were being affected along the company’s prime crude oil route.

“CSX is keeping its customers informed about the status of their shipments,” he said. (Reporting by Jarrett Renshaw; Editing by Jessica Resnick-Ault and Alan Crosby)

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