Oil Pipeline Bottleneck

I truly thought we were through the worse of it, the "it" being the "oil pipeline bottleneck."

North Dakota oil is sold at a discount, resulting in lower royalty payments to individuals and tax receipts to the state government, because of the higher cost associated with shipping oil by truck or rail compared to shipping it by pipelines.

I'm starting to get the feeling the analysts (both private and public sector) are underestimating how much oil the producers are able to produce and the ability of the pipelines to keep up.

Enbridge has confirmed that it will double its capacity in the Bakken so perhaps this is just another hiccup going forward but even the NDIC commissioner admits to seeing a "red flag, a concern."

Pipeline capacity has lagged throughout this boom, despite ongoing efforts to catch up. Every time the analysts say pipeline capacity will soon catch up, there is more data suggesting the delta is widening.

On a positive note, look at the anticipated production from North Dakota two years from now: 450,000 bopd, compared to about 300,000 now.


Pipeline, The Chantays, their only UK chart single. It hit #16 in 1963.