First, this is the nicest site because at one glance one can compare a number of spot prices.
Go down that list, and notice that there is a Bakken oil spot price missing.
At least I don't see it. Do you know which one?
It's Bakken delivered to Clearbrook, Minnesota.
Now, go back to the first link. Spot price of --
- North Dakota sweet: $80.57
- WTI: $97.17
- Clearbrook, MN, Bakken: $103.54
These data links, and dozens more, can be found at my "Data Links" page, linked at the top of the page.
Thoughts, anyone?
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Interestingly enough, the folks at CLR addressed the pricing differential in their 1Q12 conferent call:
There has been a lot of interest in the last several months about differentials on pipe barrels delivered to Clearbrook Minnesota, and Guernsey, Wyoming, markets and how this market volatility is affecting our net wellhead price realizations.
All of our Red River Unit oil is gathered at the wellhead and piped to Guernsey, Wyoming, where it is marketed. Roughly half of our Bakken oil is currently being railed to markets where it is priced against waterborne barrels, mainly Brent or Louisiana Light Sweet, which has been $17 to $23 higher than WTI during the first quarter of 2012.
Obviously, the rail transportation cost is much higher than pipe. It's been running about $20 to $22 per barrel all-in from the wellhead to the ultimate end market. But even though the rail transportation cost is higher than pipeline, delivery to the coastal markets has provided superior net pricing lately due to the recent high differentials experienced at Clearbrook and Guernsey, especially during March and April.
With the pipelines currently at full capacity, we anticipate our incremental growth over the next 18 to 24 months will be shipped by rail. And we're having no issues getting railcars and capacity.
We reported last night an average oil differential for the first quarter of 2012 of $12.27 per barrel below WTI, which is considerably above our guidance range of $7 to $9 for a year as a whole. Due to the spikes in oil differentials in early 2012 and continued supply-demand volatility at Clearbrook and Guernsey, we now expect average differentials for the year to be in the range of $9 to $11 per barrel. That's the long-haul transportation picture.
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I've never found those various price charts to be accurate or very useful. The current differential is awful, though it has been even worse at certain points in the past.
ReplyDeleteThis is not rocket science. Oil in the Williston Basin needs more pipeline capacity. State tax revenues, mineral owners, and the producing companies will continue to be punished until more lines are built. Rail is nice but it's not a long term solution. A new pipeline to eastern refineries, Keystone XL, and ONEOK's proposal are needed. Unfortunately the only certainty is that every proposal will be fought by the enviro extremists.
Agree completely.
DeleteThe reason mineral rights owners don't find the charts useful is because most oil is sold on contract, with hedges (collars, etc). And, as noted, if one looks long enough, one can find almost any price.
To prove your point, look at the top half of the post above linking the price charts and then what CLR stated in their conference call. One would have thought we were on different planets.
Like everything else, if one looks at enough data points, one starts to get a general feeling of what's going on. But one data point in time is not particularly useful.