The Financial Post reports in its Friday, Jan. 18, edition that Enbridge's North Dakota pipeline system has been underused for the past three months as railways move more oil out of the Bakken shale play, Flint Hills Resources said in a filing with the Federal Energy Regulatory Commission.
A Bloomberg dispatch to the Post reports that Flint Hills said: "This trend is not temporary. ... Rail transportation is becoming more competitive and will continue to take barrels away from the Enbridge North Dakota system."
Railways have emerged as a competitor to pipelines as production from shale fields has grown faster than pipeline space.
While rail is typically more expensive than pipelines, railcars can reach markets that pipelines do not, which ends up yielding higher prices for producers.
Flint Hills, which operates the 330,000-barrel-a-day Pine Bend refinery in Minnesota, filed the document with FERC as part of its opposition to a surcharge on the North Dakota system proposed by Enbridge.
Enbridge spokesman Graham White says, "We are seeing reduced volumes on our North Dakota system as some producers seek alternate transportation options to take advantage of favourable oil pricing in other markets."
© 2015 Canjex Publishing Ltd. All rights reserved.