Shell shelves rail unloading facility in Washington state

Written by Mischa Wanek-Libman, editor
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Shell

Shell has pulled plans to develop a crude-by-rail facility at its Puget Sound Refinery just two days after releasing the Draft Environmental Impact Statement for the project.

The project, known as the Shell Anacortes Rail Unloading Facility, would have built a rail spur to bring six trains per week carrying 60,000 to 70,000 barrels of crude oil per train on BNSF from the Bakken region of Montana and North Dakota. Shell said the capacity of its existing refinery would remain the same.

Shell cites poor economic conditions, which no longer support permitting of the rail unloading facility saying the current global crude oil market and the tight capital environment make the project non-economic.

“When we look at current crude oil supplies, prices and markets globally and the cost of the project, it just doesn’t make economic sense to move forward at this time,” said Shirley Yap, the refinery’s general manager. “We are committed to investing in this facility and there will be other ways to do that.”

The refinery receives its crude oil now via tankers that unload at its dock, and via a pipeline that serves Canadian oil fields. Shell had sought the rail project so that it could tap new supplies of crude oil in the Midwest that are not served by pipelines. However, low oil prices and abundant production elsewhere have slowed production in the Midwest and made other sources of crude more viable.

“We are confident with current crudes now available that we can continue supplying the refinery,” Yap said. “The Puget Sound Refinery will continue to produce the fuels that power life in the Pacific Northwest.”

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