"Everything old is new again," said Dave Podratz, general manager of Calumet operations in Superior.
The transfer from pipeline to water-based transportation makes sense because Enbridge can bring 500,000 more barrels a day into Superior
than it can send out, Podratz
And shipping by Great Lakes vessel is about one-third the cost of moving oil by rail car - about $3.50 a barrel compared to $9 a barrel for rail, according to Calumet's estimates.
"The Upper Midwest is awash in oil.
They have more oil than capacity to move it," Podratz
said in detailing the plan.
"We have a window of opportunity here to help move it to market."
said the Superior
oil terminal will have a relatively short life expectancy - about five to 10 years after completion - because pipelines are still the fastest and cheapest way to move crude oil.
Several companies, including Enbridge, have major pipeline expansions and new routes currently being planned.
"In fact, if Keystone XL goes ahead fast, this (Superior terminal project) probably goes away," Podratz
told the News Tribune
"Pipelines are still the easiest and cheapest way to move oil.
They just can't put pipelines in fast enough or to enough places to handle the supply right now."
Railcars, barges and ships also can haul oil to more refineries than pipelines, allowing oil companies to sell to the highest bidders.
The idea was first raised a year ago by a shipping company and an Ontario refinery on Lake Erie that wanted more oil, Podratz
That refinery eventually backed out, but Calumet
liked the concept and has kept the ball rolling.
issued a press release on the possible Superior
terminal last month, Podratz
has received calls from both refineries and the companies that own tankers and barges.
"There's a lot of interest," he
"But no one has signed on yet."
Part of the attraction is that North Dakota crude from the Bakken oil fields is trading at a deep discount compared to North Sea or even Gulf of Mexico crude - as much as $25 a barrel cheaper, making transportation costs much less of an issue in the Midwest.
North Dakota crude can be sent by rail car to the Gulf Coast more cheaply than oil produced in the Gulf Coast, Podratz
The 6-inch, 1950s-vintage pipe needs some repairs but is still in good shape and is permitted to move oil, Podratz
company's investigations show ample fleet capacity on both the U.S. and Canadian sides of the lakes, noting Canadian tankers loaded in Superior
would have to unload in Canada under U.S. maritime regulations.
"We're already moving oil out of pipelines and onto the rail system,'' Podratz
Hubbard is the reigning champion of the village's decades-old David
versus Goliath effort to get the U.S. Army Corps of Engineers
and state government to build a new breakwater to protect the harbor at Grand Marais.