November 21, 2014 / 12:13 AM / 3 years ago

UPDATE 3-CSX warns Buffalo snow may cause delays on main crude oil route

(Updates with CSX spokesman in fifth paragraph, Philadelphia Energy Solutions comment in last.)

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.

The warning comes as East Coast refiners are still dealing with routine delays on the nation’s crowded rail lines that have resulted in supply shortages and production losses at one facility at least.

The problems have been exacerbated by the region’s newfound reliance on Bakken crude oil from North Dakota, which is credited with saving the local industry.

CSX warned customers on Thursday that shipments over the Buffalo line should continue to expect delays of up to 48 hours.

“CSX is keeping its customers informed about the status of their shipments,” said CSX spokesman Rob Doolittle.

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, 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.

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 relying 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 this summer, and the refinery was forced to limit production last week because of a shortage.

Phillips 66 spokesman Dennis Nuss declined to comment. Monroe Energy and Philadelphia Energy Solutions spokeswoman Cherice Corley also declined comment. (Reporting by Jarrett Renshaw; Editing by Jessica Resnick-Ault and Alan Crosby)

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