Pipeline Closure May Help Rails

A federal judge has ordered a pipeline carrying North Dakota crude oil to be shut down for a year while the line undergoes an environmental review.

The pipeline closure is seen as a potential boon to moving crude oil by rail.

The pipeline is the largest serving the Bakken shale basin and links a terminal in Patoka, Illinois, about 75 miles east of St. Louis.

The pipeline has a capacity of 557,000 barrels a day or the equivalent of seven to eight crude oil trains.

Industry observers said that although some oil could be diverted to rail shipment, other pipelines are capable of picking up the oil sent via the closed pipeline, which is owned by Energy Transfer.

Approximately 36 percent of the North American tank car fleet is in storage. Some believe that a barrier to moving more crude by rail could be lack of operating crews due to recent furloughs by railroads.

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