Rangeland in talks for US crude by rail to Mexico

OREANDA-NEWS. September 15, 2016. Midstream operator Rangeland Energy is in talks with Mexican state-owned energy company Pemex to move US light crude by rail directly to refineries in Mexico.

The company could initially move crude from its Rio hub in the Delaware basin near Loving, New Mexico, and later would transport it from a terminal it is building in Corpus Christi, Texas, said vice-president of business development Michael Moss, on the sidelines of the Hart Energy Midstream Texas conference in San Antonio.

"We are in discussions with them about making that happen," he said.

Rangeland is planning to begin manifest shipments at the Corpus Christi terminal in the first quarter of 2017 and unit trains by the end of 2017. The terminal — known as the South Texas Energy Products System (STEPS) — is on Kansas City Southern (KCS)-operated lines. The KCS network connects the US Gulf coast and much of Mexico.

The STEPS terminal includes refined products and LPG and is primarily designed to meet increasing demand in Mexico following the opening of fuel markets there.

Earlier this year, the Mexican government decided to allow service station owners to freely import and buy fuel from companies other than Pemex starting in April 2016, nine months ahead of schedule.

Moss would not specify which grades of crude are being discussed with Pemex for the crude-by-rail transport.

Pemex has long shown interest in US light crude grades to blend with domestically produced heavy oil supplying three of its six refineries. This blending would allow the refineries to produce higher margin products like diesel and gasoline.