Surely by pipeline or ship I think. When he says "physical barrels of oil" I believe he means he's actually buying the oil itself (as opposed to buying a contract or derivative of some sort). I don't think he means that the crude oil is actually arriving in individual barrels. But I could be wrong.

Pipeline and ship. We've done some rail in the past, but it is a last resort when basis spreads are wide.

The oil is pumped off of ships or straight off the pipeline into our refinery tankage.