Phillips 66 to buy rail cars to transport shale oil

Phillips 66 plans to buy as many as 2,000 railroad tank cars to ship oil from shale fields to its refineries, another indication that the shale boom is shaking up the U.S. energy industry.

Phillips 66 (NYSE: PSX) plans to buy as many as 2,000 railroad tank cars to ship oil from shale fields to its refineries, another indication that the shale boom is shaking up the U.S. energy industry, Reuters reports.

Oil companies in thriving shale fields such as South Texas' Eagle Ford and North Dakota's Bakken have turned to rail, trucks and barges to move crude because pipeline development has not kept up.

Greg Garland, chairman and CEO, said during a June 8 presentation at the Citi Global Energy Conference the plan is targeted for "the next year or two."

"That's a pipeline on wheels," Garland said. "So, that could go to the Bakken. It could go to the Niobrara. It can shift as the opportunity shifts around the country."

Houston-based Phillips 66, the newly spun-off downstream arm of ConocoPhillips? ? ConocoPhillips Latest from The Business Journals Endeavour stock soars after North Sea purchaseBP awards Emerson million technology contractIllinois attorney general files suit against Wood River refinery Follow this company , has refineries on the East, West and Gulf Coasts, and Garland said the company currently refines about 100,000 barrels per day of shale oil but could handle 500,000 bpd, reports Reuters.

The initial goal is to increase delivery of shale crudes to Phillips refineries by 100,000 to 150,000 bpd within two years using railroad unit trains, reports Reuters.

Emily Wilkinson leads the special publications and weekly Focus sections of the Houston Business Journal.

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