BNSF Can Handle More Crude-by-Rail Shipments if Dakota Pipeline is Shut, Railroad Says

BNSF, the railroad unit of Warren Buffett's Berkshire Hathaway Inc, is prepared to handle any increase in rail traffic if the Dakota Access oil pipeline (DAPL) is shut due to an ongoing legal dispute, the company told Reuters.

The operators of the 570,000 bpd line, led by Energy Transfer LP, have been locked in a battle to keep the line open after a federal judge last year scrapped a key permit and ordered an environmental review of the line. A U.S. District Court could issue a ruling as early as May on whether the line can stay open during the review.

Any closure of the line would divert most crude production in the region onto railcars and create transportation bottlenecks.

BNSF operates the greatest number of route-miles in North Dakota, the second-biggest oil producing state in the country and leading producer of agricultural products such as wheat and canola.

"We are confident in our ability to handle additional volume across our Northern Corridor, whether it comes from more agricultural products, consumer goods or industrial products, including energy," spokeswoman Lena Kent said in a statement late Thursday.

The other major railroad serving the region, Canadian Pacific Railway Ltd (CP.TO), did not immediately respond to a request for comment.

Before DAPL began operations in 2017, the booming Bakken shale basin relied on rail to transport barrels, which is typically more expensive than pipeline shipments. Volumes spiked, creating congestion on the railroads.

In 2014, BNSF invested more than $1 billion toward maintenance and expansion projects in that region, where the railway serves agricultural and energy customers, to alleviate congestion.

"A shutdown of the pipeline would be easily accommodated and would not adversely affect the movement of other products that move on our railroad," Kent said.

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