The US Supreme Court has agreed to review a case over permitting of a proposed railroad project road out of the Uinta Basin. The proposal, the Uinta Basin Railway Project, is critical for growth due to unique challenges operators face in the Utah basin.
On June 24, the US Supreme Court agreed to hear the case of Seven County Coalition vs Eagle County, CO. The appeal advanced after the US Court of Appeals overturned permits from the US Surface Transportation Board for the Uinta Basin Railway.
The project would build ~80 miles of rail connecting the Uinta Basin in northeastern Utah to the Union Pacific Railroad in Kyune, UT. From there, railcars would travel east through western Colorado along the Colorado River, ultimately arriving at a rail hub in Denver. From Denver, crude oil could travel north to Wyoming or south to the Texas or Louisiana Gulf Coast (see project map).
The STB initially approved the Uinta rail project in December ‘21, but Eagle County in Colorado and the Center for Biological Diversity filed petitions in the US Court of Appeals for the District of Columbia Circuit challenging the permits. In August 2023, the US Court of Appeals struck down the STB approval, calling it “arbitrary and capricious.” The court vacated parts of the STB’s environmental impact statement for impacts associated with the railway’s construction and operation, stating these did not fulfill requirements laid out in the National Environmental Policy Act (NEPA).
The Seven County Coalition in Utah filed an appeal of the ruling by the appellate court, challenging whether the NEPA process requires an agency to examine environmental impacts beyond “the proximate effects of an action within its regulatory authority.” The Supreme Court agreed to hear this case during its 2024-25 term, which starts in the fall.
East Daley tracks the Uinta Basin in the Crude Hub Model. The Uinta is known for its ‘waxy’ crude oil with high paraffin content. The crude oil solidifies at room temperature and has a pour point of 105-120 Fahrenheit. Refiners tend to like the unique crude oil due to its low sulfur, low metal, and low nitrogen content.
Uinta Basin crude production averaged 155 Mb/d in 2023, and we forecast output of over 160 Mb/d in 2024 in the Crude Hub Model (see figure). Currently, ~70 Mb/d and up to 110 Mb/d of waxy Uinta crude makes it way to Texas, Louisiana and Mississippi Gulf Coast refiners.
Markets for Uinta crude were previously isolated to refiners in Salt Lake City due to the challenges in moving the crude. Mountains surround the Uinta Basin to the east and south, and markets can be difficult to reach, especially during the winter.
Additionally, producers in the Uinta can’t use pipelines to move product. To move via pipe, the waxy crude would require blending of 5-6 barrels of light sweet oil to each Uinta barrel, and producers have no source of light crude in the area. Operators instead use specialized trucks or railcars with heater coils. Rail is advantageous due to the existing infrastructure and relative ease to transport the crude as a solid. The heater coils in the cars are then used to return the crude to a liquid state at the final destination.
It could be a game-changer for Uinta producers If the Supreme Court rules in favor of the Seven County Coalition. They would be able to move an additional 5-8 railcars a day at ~660 bbl per car, or an ~8,000 Mb/d increase in capacity. According to the producers, this is well within their wheelhouse to fill. — Kristine Oleszek.
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