Project North StarDiscussion Materials
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SPP runs a significant volume of North Dakota Light (“NDL”) crude oil
Recent test runs indicate SPP can run XX% more NDL than it has historically
Neither NTE or SPP have shipping capacity in Enbridge’s Portal system proportional to our supply needs
Therefore, we are subject to “skimming” by marketers
Situation Overview SPP is a final market for NDL producers
and has the potential to generate the highest netback to the well head
Trucking and shipping costs have been escalating due to infrastructure bottleneck
NTE’s BOD has approved the development and construction of pipeline from ND to MN sponsored by NTE
We would like for Oxy to become an anchor tenant
NDL – WTI Historical Differential
3
Bakken Rail Alternatives
1: Cushing• EOG unit train is
50,000 bpd unload• WTI Cushing basis
is not optimal, but “clears” supply
2: Gulf Coast• Rail unload into Plains
& NuStar = XXX,XXX bpd unload capacity
• Ideal alternative – LLS has covered transportation burden this year
3: BakersfieldRail switching, short lines, lack of service makes this difficult
4: Albany/PADD I• New market to Global’s
Albany terminal—barged to Sun Philadelphia
• Truck, rail, terminal to barge is expensive
5: Anacortes • Tesoro committed
“space” to Rangeland’s Epping ND terminal
• Estimated 20,000 bpd could land via rail to Anacortes
Model Comments• High transportation costs make rail
alternatives difficult
• Service is not reliable, shortage of switch engines and destinations
• The LLS premium temporarily covers rail transportation
• As the arbitrage weakens, it pressures the cost of rail back to the lease in North Dakota
$XX
$XX
$XX
$XX
$XX
$XX
Emerging rail from other fields competes for the same unload spots
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Well Head
3rd Party Truck$X.XX/bbl
3rd Party Truck$3.00/bbl
$1.50/bbl Transload Fee
LR$3.50/bbl
Gathering$0.71/bbl
NTE Pipeline$2.40/bbl
Saint Paul Park Refinery
Cottage Grove Storage
Gathering$.XX/bbl Tariff
Minnesota P/L$X.XX/bbl Tariff
Enbridge Portal$2.00 Shipper Margin +
$X.XX/bbl Tariff
Clearbrook Storage
Current DynamicsRail Crude & Pipeline Supply Options
Difference off WTI, $/bbl MPL Rail NTE P/L
Third Party Truck X.XX X.XX X.XXGathering Cost X.XX - X.XXShipper Margin X.XX - -Transload Fee - X.XX -Pipeline Tariff X.XX - X.XXRail Cost - X.XX -MPL Tariff X.XX - -SPP Delivered Cost (X.XX) (X.XX) (X.XX)