CHICAGO Plains All American Pipeline LP has acquired four crude oil rail terminals and one under development from U.S. Development Group LLC for $500 million, the companies said Wednesday.
Houston-based Plains All American said the move represents a significant addition to its rail activities in North America.
"Given recent and projected increases in North American crude oil production ... we believe that strategically located rail loading and unloading assets will continue to play an important role in the transportation of crude oil in North America," chairman and chief executive officer Greg L. Armstrong said in a statement.
The deal with U.S. Development Group, also based in Houston, includes three crude oil rail loading terminals in the Eagle Ford, Bakken and Niobrara shale regions; a rail unloading terminal in St. James, La.; and a project to build a crude oil unloading terminal near Bakersfield, Calif.
All three shale playsthe Eagle Ford in south Texas; the Bakken shale, which underlies parts of the Dakotas, Montana and Saskatchewan; and the Niobrara shale, located largely in Coloradocontain oil.
With the deal, Plain North American said it would have crude oil rail loading facilities extending from the U.S. Rocky Mountains to south Texas and unloading capacity on the East Coast, West Coast and Gulf Coast.
Plains All American said it expects to have approximately 6,700 rail cars leased by the end of 2013.
Energy transmission firms such as Plains All American increasingly have shifted investments toward rail capacity to move oil as drilling activity ramps up in places that had not been traditional sources of oil in the United States and where pipeline capacity is lacking (amm.com, June 12).
In another recent deal, a subsidiary of Enbridge Inc., Calgary, Alberta, formed a joint venture with Canopy Prospecting Inc., Edgemont, Pa., to develop rail capacity that would deliver crude oil from the Bakken shale in North Dakota to refineries in Philadelphia (amm.com, Nov. 27).