Updates
April 15, 2015: link to short note on this at PennEnergy. PennEnergy links break early, requiring a subscription for archives. The important point in this short note:
The Bakken Crude Express Pipeline, Oneok's first foray into oil, would be able to handle as much as 200,000 barrels per day and would combine with five other proposals to offer the region the ability to ship 900,000 barrels per day.
Original Post
"Tygar45" provided the map: note how much of the proposed pipeline follows existing pipeline corridor. The pipeline appears to originate near Stanley area, goes west, then southwest into Montana; the pipeline follows the Montana state line south, the Wyoming state line south (staying outside of Nebraska), through northeast Colorado (D-J Basin), and then southeast through Kansas into Oklahoma, over to Cushing.
This is a huge story. And a huge "thank you" to a reader for sending me the link. I would have probably seen it evenutally, but I had not seen it until now.
The press release was released 3 hours ago.
ONEOK today announced plans to invest $1.5 billion to $1.8 billion between now and 2015 to build a 1,300-mile crude-oil pipeline with the capacity to transport 200,000 barrels per day (bpd). The Bakken Crude Express Pipeline will transport light-sweet crude oil from the Bakken Shale in the Williston Basin in North Dakota to the Cushing, Okla., crude-oil market hub.For those keeping track, ONEOK:
- $1.8 billion for natural gas gathering and facilities in McKenzie and Williams County (for future reference, I will probably round this to $2 billion)
- another $150 million for more gathering pipeline in Divide County (announced this month)
- now, $1.75 billion for a new crude-oil pipeline (for future reference I will probably round this to $2 billion)
More from the press release (and, again, repeating, a press release):
"As producers continue to aggressively develop crude oil from wells in the Bakken Shale, more crude-oil pipeline takeaway capacity will be required," said Terry K. Spencer, ONEOK Partners president. "This proposed pipeline will provide producers with efficient and reliable transportation of their product directly to one of the largest crude-oil market hubs in the U.S."ONEOK has a special place in the cockles of my heart. I knew nothing about ONEOK before I started blogging. I discovered ONEOK accidentally when I drove by Stateline I and saw something huge going up. I posted photos at the time. It was a bit of a learning curve for me as I posted live what I thought was going one. Some folks (a minority) wrote to tell me I was an idiot (they didn't read my disclaimer, I guess) but others provided me outstanding support and additional information. I don't recall if "anon 1" was one of those, but most likely.
"It also represents our entry into the crude-oil transportation business and utilizes our existing core capabilities of transporting and storing natural gas, natural gas liquids and refined petroleum products," he said. "Many of the supply commitments under negotiation are with the same producers in the Williston Basin that we currently serve."
Supply commitments for the proposed pipeline are in various stages of negotiation. Following receipt of all necessary permits and compliance with customary regulatory requirements, construction is expected to begin in late 2013 or early 2014 and be completed by early 2015. Based on supply commitments prior to construction, the capacity can be increased.
Additionally, the proposed pipeline route will be well-positioned to transport crude-oil production from the Niobrara Shale.
The proposed pipeline route is expected to parallel more than 80 percent of the partnership's existing and planned natural gas liquids pipelines. It will be designed, constructed and operated using proven technology, pipeline control systems and continuous safety monitoring.
ONEOK also holds a special place in my heart because it tackled a problem that others folks saw but didn't pursue: flaring. It still amazes me ONEOK jumped on this before MDU which is headquartered in North Dakota.
I'm impressed because it appears ONEOK did its homework well. The talking head analysts' view of the natural gas economic potential of natural gas in the Bakken oil field was 3 percent. Be that as it may, three percent of $4 billion/month going into the Bakken represents a bit of change (as in silver, gold, and sandwich coins).
Finally, ONEOK has a unique business model in an oil field -- not really unique, I suppose, but again, seeing an opportunity others passed up. It might be a stretch, but it sort of reminds me of NOG, another company (albeit much smaller, and comparing apples to oranges) that saw an opportunity others did not, and has a unique business plan.
But the biggest story that comes out of this press release: North Dakota currently produces 500,000 bbls/oil per day. An earlier post today, from Bakersfield.com, reiterated what others are talking about: 1,000,000 bbls/day in the out years from the Bakken. This one pipeline ONEOK is proposing will carry 200,000 bbls/day and will be built with potential to expand. This suggests to me that others agree, that the Bakken will eventually surpass one million barrels of crude oil/day.
Huge.
Disclaimer: this is not an investment site. I do this for my own education and enjoyment and elect to share it with others. I do not hold shares in ONEOK and probably never will.
But if you want to know where I might be headed (with regard to investing), re-read the Bakersfield article.
Oh, as long as I'm rambling. Everyone knows that Cushing is glutted with oil, and yet ONEOK is going to push another 200,000+ bbls of Bakken to Cushing. This suggests at least two things to me, but I've already rambled too long.
Good news. Thank you for posting this. Though I fear the enviro extremists will hound this project just as they are the Keystone XL. On the plus side, the pipeline won't carry their hated "tar sands oil". Also the proposed route skirts Nebraska entirely.
ReplyDeleteThough on the down side, the pipeline still carries their hated "oil", and still crosses over a portion of the Oglala aquifer. So I'd bet the extreme enviros will pull out the long knives to attack this pipeline too. I believe in Vegas they'd call that bet "easy money".
I had the same thoughts, but hopefully it will work out for all involved.
DeleteCouple points:
ReplyDeleteThe proposed pipeline bypasses Nebraska entirely but doesn't necessarily avoid the Ogallala aquifer in SE Wyoming. Wyoming is going to approve this pipeline and there is almost nothing Nebraska can do about it.
ONEOK should be able to get a much bigger transportation premium for Bakken oil, as the pipeline won't be mixing in lower grade Canadian oil sands material.
Could see ONEOK actually constructing a third major pipeline: bringing condensate type material (octane) north to Canada to mix with the heavy Canadian crude for better pumping ability. The condensate once received would be essentially recycled back from Gulf Coast refineries and returned to Canada via a third pipeline.
here is an article with a map http://stateimpact.npr.org/oklahoma/2012/04/09/another-new-pipeline-coming-to-oklahoma/
ReplyDeleteGreat map; thank you. I put the link in the main body of the post. Again, thank you.
DeleteWhat does ONEOK (OKS,OKE) have to do to get into your Bakken Market Basket? KMI?
ReplyDeleteGood catch. I replaced KMI with OKE and OKS.
DeleteWow,that all sounds pretty impressive. A little patients and things get reorganized. Aviod all obstacales. Just hope the country can see the importance of all this! And doesn't go into panic attack again. Just allow people to get to work.
ReplyDeleteI get a chuckle out of the fact that the proposed pipeline hugs the Nebraska state line but does not enter.
DeletePocket Change you can believe in.
ReplyDeletehttp://www.chk.com/News/Articles/PressReleases/04-09-12%20Asset%20Sales.pdf
anon 1
When will you change the name to Billion Dollar Way? ;)
ReplyDeleteanon 1
I suppose I should.
DeleteAs noted in a very, very early posting, the name for the blog came from the "nickname" of highway 2 & 85 leading out of Williston, on the north. It was my metaphorical and literal road out of Williston to the rest of the world. I hitchhiked three times across the country, and a couple of times, I started and/or ended at the Million Dollar Way on my way home. That stretch of commercial road -- mostly car dealers, bowling alley, fast-food, at the time, holds a lot of great memories.
So, it will be hard to change the name of the blog. I worried about the name of the blog at one time, but most folks find sites by "googling" and then "bookmarking" the ones they want to return to, so to some extent the name is not that important.
Having said that, I don't know if others have noticed, but in the past two or three weeks the number of visitors to the site have increased dramatically. I don't keep track on a daily or weekly basis, but it seems the number is going up more quickly than I've seen in the past.
So, thank you everyone, who has visited.
Me thinks in light of the current situation to the south, cushing, seaway, LA with its very own shale formations, the strategic thing for Oneok partners would be to cut a new path to the west cost from the intersection point of the Niobrara and Bakken terminus. By the time the impact of these northern basins is clear to the masses, American energy independence will already have arrived and thus Market share gains for all the surplus production will come from export to Asia, especially Japan and China. The current rush of inventory to Cushing is problematic as Eagle Ford and the OK fields will fill capacity very fast.
ReplyDeleteBuild for forward demand.......not current markets.
I agree.
DeleteTransCanada tried and one sees what happened there.
But, necessity is the mother of invention, innovation, and flexibility.
Under the radar scope, about three years ago, Union Pacific and BNSF had a race to complete a dual track from Chicago to Los Angeles. I forget who won; it was close. I think BNSF, but I could be wrong. In some areas, BNSF as a triple track to Los Angeles and southern California, I believe. No obstacles getting mid-continent oil to southern California.
Article from Bakersfield saying same thing was posted yesterday.