Kirby Corp. (NYSE: KEX) is working with major oil operators from the Bakken Shale to ship its crude via barges on the Mississippi River all the way to Louisiana for refinement.
As the shale revolution continues unabated—even as fracking continues to rack up controversy—the U.S. Gulf Coast stands to benefit greatly from such domestic transit routes.
The Gulf has traditionally relied on imported crude, which is quite expensive compared to domestic material.
Kirby’s barges will take about a week to transport crude from the Bakken in North Dakota and Montana to Louisiana.
The Mississippi River was never exactly a booming oil transporter, but the shale revolution changed all that. Kirby owns more than a quarter of the nation’s tank barges, and if their plan succeeds, then Bakken oil traffic will increase dramatically—something that will surely impact the Mississippi region.
Major companies operating in Louisiana include Exxon Mobil (NYSE: XOM), Phillips 66 (NYSE: PSX), and Marathon Petroleum Corp (NYSE: MPC). That state, after Texas, is the second largest oil refining state in the U.S.
Traditionally, crude has been transported by rail. This applied to the Bakken too, where as of April, production topped out at 600,000 barrels per day.
Riding on that surge, the number of rail cars in use for transportation shot up by 38 percent year-over-year to almost 241,000 in the first half of 2012.
Of course, with such explosive demand, it became harder to keep up a steady supply. That’s when the notion of using barges emerged, and it looks like the plan may just work out.