Could Philadelphia Become 'Cushing East'?

Eddystone's location on the Delaware River also presents the opportunity to send crude-laden barges to refineries in the New York City area such as Phillips 66's Bayway and Linden facilities in New Jersey, Johnson added.

Birth of a Trading Hub?

Canopy and Enbridge also underscore the independence of the Eddystone crude-by-rail facility. Unlike some crude oil terminals, the Philadelphia facility will not be controlled by a single refiner or railroad.

"We feel that regardless of which carrier one of our customers chooses, they will do well," said Johnson. "We are an open facility, we are Geneva for the railroads. As long as they provide reliable service, we don't care."

Having access to an independent facility enables a producer to market its crude oil to multiple refineries for the best price, Johnson explained. Refiners wishing to run different crude slates will have options from various producers, he added. In fact, the Eddystone terminal will be equipped to handle light sweet crude oils from other plays beside the Bakken. Under Phase 1 of the project, the terminal will be equipped to accept "Bakken-esque" crudes with API gravities ranging from 35 to 45 and 0.2 percent or lower sulfur content. As a result, fungible crudes that could be traded under this "Philly Light" spec include production from Eagle Ford, Niobara, Permian Basin and Canadian Light Synthetic Crude sources.

Johnson likened the Eddystone terminal to a Swiss city known as a neutral venue where diplomats from around the world meet to broker deals on behalf of their respective governments. However, he acknowledged that a component of the project's second phase could help the burgeoning facility become a smaller, East Coast version of a place well-known to energy industry dealmakers: the U.S. oil trading hub at Cushing, Okla. After Eddystone adds segregated storage capacity in the second phase, it will also be able to accept non-fungible slates – that is, crude oils that cannot be substituted for one another.

"We're able to create a kind of mini-Cushing here, eventually," said Johnson. "There's a lot that can be done. It all depends really on where the market will take us."


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WHAT DO YOU THINK?


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Edward Young  |  May 22, 2013
This is the perfect solution for supplying the Northeast refineries. The cost, time, and regulations to build/rebuild pipelines would be enormous. Forget the differance in transportation costs rail vs pipeline. How many billions of dollars and how many years before an adequate pipeline system could be built. There is another player rapidly coming into the game. The production of crude, diesel, and other liquid and gas commodties being produced from natural gas.Most notably at the wellhead. This technology will recover stranded and flare gas situations and has the potential to take the place of building extensive and expensive pipelines.The economic potential of NG to GTL to a refinery or chemical company can be a leading force of American independence of imported oil or gas.
Randy Parsons  |  May 20, 2013
Nice job. Its Great to see companies doing new and exciting things to use and save the past. As we all know if you would have tried to build a new refinery it would have never got past the permitting process. Thanks