Trains have quickly become a huge part in hauling crude from North Dakota's oil patch with producers shipping barrels to more profitable markets not served by pipelines.For previous posts on shipping Bakken oil by rail, click on the tag "Rail" at the very bottom of the blog.
Motivated by the possibility of making more than $20 a barrel, North Dakota producers increasingly are sending crude on rail, including to a Louisiana terminal some 1,800 miles away.
"The new paradigm is rail," said Harold Hamm, chief executive of Enid, Okla.-based Continental Resources Inc., one of the oldest and biggest players in the rich Bakken shale and Three Forks formations in western North Dakota.
North Dakota crude typically sells for $10 less per barrel at Cushing, Okla., where benchmark prices are set for West Texas Intermediate crude on the New York Mercantile Exchange.
Some North Dakota producers are now bypassing Cushing, in search of better prices in Louisiana, where the gap between prices for Light Louisiana Sweet and West Texas Intermediate crude has risen to historic levels. North Dakota sweet crude compares in quality to Light Louisiana Sweet and fetches like prices.
Sunday, March 13, 2011
Update on Shipping Bakken Oil By Rail
Link here.
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capitalism works in America, if you let it..
ReplyDeleteIt really is incredible, isn't it.
ReplyDeleteAnd all I can think of is Warren Buffett buying BNI (Burlington Northern Santa Fe) just when the Bakken was "taking off."
Maybe that was because he knew the pipeline wasn't going to be built.
DeleteNo, he bought the pipeline for the coal shipment, and knowing all the reasons to buy a railroad. The Bakken was not in his calculations. That was pure luck.
DeleteBruce two comments, Conoco Phillips has invested substantial monies toward a refining facility in SO IL... might prove to be an alternative to south bound traffic.
ReplyDeleteThe other wild card is Hyperions proposed enrgy center at Elk Point SD, this would seemingly be the Key project for Bakken maximization for capital return. This project is in obfuscation mode, with inertia overlaid by government and certain oligarchic interests.
Thank you for those updates. It is amazing what free markets will do. Both those stories are very interesting: COP/southern Illinois, and Hyperion/Elk Point, SD. If it appears the new floor for oil is $100, I think we will see a new spurt in energy projects.
ReplyDeleteCushing was not built for the expectation that it would serve areas North, its full as folks probably know, WTI is what it is because of Cushing as a gathering site for the pride of OK &TX oil production.
ReplyDeleteNew Projects are needed, the North East population centers would be well served by the Elk Point project, it would lower costs for producers, providing a better ROI, funny thing is that in the decade of long debate about it, most of the rational for it was to process Canada product.
Now with Niobrara and multiple N Dakota production records to be broken year after year, Elk Point project has substantially better economics than ever the planners envisioned.
The COP SO Il venture is wrapped in some fog...but its clearly positioned for the production from the IL and Utica shale basins.
Excellent post, thanks.
ReplyDeleteI never thought about that, but in hindsight (for me) it's obvious: Cushing was built for OK/TX, long before anyone knew about the Bakken.
It will be interesting to see activity in fossil fuels development with Germany shutting down 7 reactors (at least temporarily; China suspending action on 27 reactors (at least for the time being); and Japan needing to convert to conventional energy at least for a while.
Please Bruce, never mention fossil in context with oil. The Red Wing impactor laid this oil in. For proof all you need do is look at the Pictures of the distribution of oil on Jupter.
ReplyDeleteNucleation is the process where the material vaporized by impact, is reconstituted as oil, this phase change happens over a very short period of time, the cavitation/shock waves are the front ends of temporary vacuums, all material in the path of these waves is captured, cooked, reconsituted at point where the waves themselves run out of energy, leaving a constant saturation area out to the limits of the waves. The oil litterally rained back down across the affected area eventually soaking into the natural fractures created by the crypto explosion.
I know that Rep Nancy Pelosi and Governor Rendell of Pennsylvania do not consider natural gas a fossil fuel.
ReplyDelete