HOUSTON (Reuters) – Investor Drexel Hamilton Infrastructure Partners LP and rail operator Rio Grande Pacific Corp on Friday disclosed plans to build a $1.5 billion rail line that would transport heavy crude from Utah to connections to the U.S. Gulf Coast.
Drexel Hamilton and Rio Grande officials said the project aims to deliver about 400,000 barrels per day (bpd) of Uinta basin crude to Gulf Coast refineries looking to replace heavy oil supplies from Venezuela.
“The Uinta has only been restricted from Gulf Coast and overseas refiners as a result of limited takeaway capacity,” said Mark Michel, a managing partner at private equity fund Drexel Hamilton. “We are going to change that.”
Uinta Basin oil now is trucked to Salt Lake City refineries because it is too thick to put into a pipeline, Robert Bach, president of Rio Grande said in an interview. “This (Gulf Coast) market is much bigger.”