Bakken Economy Drives $326 Million BNSF Capital Projects In Minnesota -- October 7, 2015

The StarTribune is reporting:

The number of trains carrying oil from North Dakota and traveling through the west metro and downtown Minneapolis has temporarily been increased. More Bakken oil trains are entering the Twin Cities via the western suburbs, a route that sends an increasing amount of the hazardous cargo through downtown Minneapolis.

BNSF Railway, in reports filed with state officials, said the number of trains carrying at least 1 million gallons of crude oil is increasing through this rail corridor, starting with a modest gain in July followed by a larger bump in September.

Now, 11 to 23 oil trains each week pass through the western suburbs of Wayzata and St. Louis Park on their way to Minneapolis, up from a nominal number a year ago, according to BNSF reports obtained by the Star Tribune.

This route takes trains past Target Field, through the North Loop and across the Mississippi River at Nicollet Island. The oil trains are destined for eastern refineries.

Meanwhile, the Sandpiper (which would relieve some of this rail congestion) has been keystoned.

The good news: this is all temporary:

BNSF spokeswoman Amy McBeth said the rerouting of oil trains on the Willmar-to-Minneapolis corridor is a temporary change related to the company’s $326 million in capital projects in Minnesota this year. Upgrades are being made to rail lines across the state, but that work ends with winter’s arrival. 

Of course, if the Sandpiper had been in place, this would not have been an issue in the first place.

Regardless: $326 million in capital projects in Minnesota driven by the Bakken economy.

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Risks Exaggerated?

Oil & Gas Journal is reporting:

The high-growth business models of US independent operators are being tested by low oil prices and tougher access to capital. But two recent Wood Mackenzie Ltd. reports concluded that concerns surrounding October reserves-based lending (RBL) redeterminations have been exaggerated.

The reports appeared as Moody’s Investors Service predicted banks will lower their 2015 fall price decks by 15-25% from their spring 2015 assumptions, “significantly reducing RBL borrowing bases for some E&P companies.”

WoodMac’s Corporate Service Insight, “US Independents: How strong, for how long?”, examines the financial health of 26 independents, concluding that the larger producers have the required flexibility to tide them through the near term at the very least.

Fraser McKay, WoodMac corporate analysis research director, said, “Most companies in the peer group have rising absolute debt levels, and October’s RBL redeterminations have been latched onto as a potential catalyst for sector implosion. But at least two thirds of Lower 48 production is attributable to companies with no RBL exposure at all, or have no redeterminations until 2016.”

Of those larger producers with near-term debt redeterminations, WoodMac estimates most can accommodate a borrowing-base cut of over 50% before their situation becomes imminently critical.

Much more at the link.

See also this Wood Mackenzie on break-even prices. (I continue to link stories on break-even prices for crude oil, but I seldom read them and pay attention to them even less often. There are too many variables, and too much apples-to-oranges comparison.)

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Global Warming Scam

Link here. Another story we won't see on CBS/NBC/ABC Evening News.