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Friday, January 20, 2012

Harold Hamm -- CNBC -- January 20, 2012 -- The Bakken, North Dakota, USA

Link here.

Though the byline is Bismarck, and there is no video, I think this is related to the interview that CNBC had with Harold Hamm this date at about 8:40 a.m. EST.

Some data points:

First, reality:
North Dakota oil drillers increasingly will rely on trains to move barrels of crude to market after the Obama administration's decision to reject plans for a pipeline that would run from Canada to refineries on the Gulf of Mexico, state and industry officials say.
"Pipelines are by far the safest and most economically efficient way to transport oil, but we are left with a limited number of options if pipelines are off the table," said Tony Clark, chairman of the North Dakota Public Service Commission. "Once the oil is flowing, it has to go somewhere."
Second, cost: 
Alison Ritter, a spokeswoman for the state Department of Mineral Resources, said the state's so-called takeaway capacity is adequate, though producers and the state were counting on the on the Keystone XL to move North Dakota crude.

Shipping crude by pipeline in North Dakota adds up to $1.50 to its cost, compared to $2 or more a barrel for rail shipments, producers say.

"Oil that would have moved by the Keystone XL is now going to shift to rail transportation," Ritter said.
Third, hypocrisy: 
Wayde Schafer, a North Dakota spokesman for the Sierra Club, said Obama's decision was appropriate though oil that would have moved on the pipeline will be transported by environmentally riskier rail or trucks.
Fourth, Warren Buffett and BNSF
BNSF Railway Co. hauls about 75 percent of the oil that currently leaves North Dakota by train, ...

The railroad is a unit of billionaire Warren Buffett's Berkshire Hathaway Inc., and Buffett is a longtime Obama adviser.

Harold Hamm, ... believes Buffett had no influence in Obama's decision to block the pipeline. Instead, he called it a "lucky break" for Buffett.

"Warren is smart and I like his intuition. He is a friend of mine," Hamm said. "I don't agree with his political leanings and his liberal outlook on things. But certainly he's favored by this decision — it's easy to figure that one out."
Fifth, rail and CLR
Hamm said most of his company's production already is shipped by rail. If the Keystone XL is not built, oil production will be slowed in North Dakota but the domestic oil will be more valuable without the competition from Canadian crude ...

4 comments:

  1. Very diplomatic comments by Harold Hamm of Warren Buffett. Hard to believe he doesn't see through what Buffett is up to. I doubt the price will be impacted much by the denial of Keystone. Oil is a world traded commodity. Takeaway will be impacted and that usually means a discount price at the wellhead. Unless you the a special agreement from Warren's railroad. Very interesting, inquiring minds would like to know.

    Bismarck Tribune article on flaring and the Garden Creek gas plant.


    http://bismarcktribune.com/news/state-and-regional/north-dakota-s-newest-natural-gas-plant-aims-to-curb/article_a716f46e-43b8-11e1-b99a-0019bb2963f4.html

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    1. I thought the same thing: very diplomatic/very tactful. But that's what I would expect of Harold Hamm, what little I know of him.

      I did link the Bismarck Tribune article earlier:

      http://milliondollarway.blogspot.com/2012/01/huge-huge-oneok-garden-creek-natural.html

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  2. I am very surprised that there is a only a fifty cent per barrel extra cost for rail versus pipeline.

    At the Minneapolis Canadian Nation/Formerly Soo Line yard in Minneapolis I have seen a few unit tanker trains. CN/Soo has tracks to Minot and track sharing to the west. I do not foresee the the Canadian government meddling in this totally domestic USA operation.

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    1. I would imagine the price differential will change depending on supply and demand for various ways to ship.

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