Pennsylvania oil refineries turn to Bakken to cut costs

Two major Pennsylvania oil refineries have announced plans to increase their reliance on oil supplies from the Bakken shale play in North Dakota.

Platts reports that Philadelphia Energy Solutions, a joint venture between Sunoco and The Carlyle Group, announced plans to increase oil from the Bakken region at a critical Philadelphia oil refinery to between 140,000 and 180,000 barrels per day, up from only 20,000 barrels per day.

The refining plant was slated to be closed after Sunoco failed to find a buyer, but a deal that heavily involved increasing Bakken oil helped save the refinery.

According to The Houston Chronicle, a nearby oil refinery in Trainer, Pennsylvania, has taken a similar approach. New owner Delta Airlines hopes to ship in Bakken crude via train at a discount in an effort to control its rising fuel costs.

Reuters reports that these efforts could prove unsuccessful in the long run, as greater transportation infrastructure is likely to spur increased competition between East Coast and Gulf oil refineries, which should push up oil prices.

Information on U.S. oil refining and processing is available at PennEnergy's Research area.


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