Crude-by-rail: this was posted a few days ago -- Burlington Northern shipping almost 40% of the Bakken production. Now, this month's director's cut:
Crude oil take away via pipeline is now 43% of daily production, but transportation by rail at 46%. I.N.C.R.E.D.I.B.L.E.Warren Buffett's home is in Nebraska. Warren Buffett owns Burlington Northern, one of the few companies he owns outright. Think he was happy to see the Keystone XL killed by his friend in the White House? Actually, it would have made little difference to the Bakken: operators found it more lucrative to send their light, sweet oil to the east coast, not to the gulf. Funny how things work out.
Unless you're one of the Geico cavemen living under a rock, you have known for a few days that the Bakken broke another production record, up almost 4% over the previous month, up to over 700,000 bopd.
And Bakken operators, like the folks over at The Oil Drum are fond of pointing out, are running hard to keep up, keep breaking records. Active wells also increased by 3 percent, from 7,467 to 7,701, a new all-time high.
701,134 bbs/7,701 wells --> 91 bbls/day/North Dakota well. Keep in mind, North Dakota produces more oil with its 7,700 wells than California does with its 60,000 wells.
And then look at this. July Bakken was down to $71/bbl; in September it was $85/bbl and today it was almost $90/bbl. The delta between July and September: $20. A well producing 100 bbl/day --> $2,000/day more; per annum --> $730,000.
The MDW has been pointing this out for quite some time now: the pace of permitting is increasing significantly: July permitting - 183; August permitting - 261; and now, in September, 273, a new all-time high. The old metric: active rigs. The new metric: new permits.
The usual comments were made by the Director, including concerns about federal regulation of fracking. If the president is re-elected, it's a no-brainer that fracking will be federally regulated, and it won't matter whether or not diesel is used. There is simply too much money pouring into four counties in fly-over country for the federal government not to be interested; too many folks loathe the oil and gas industry for fracking not to be federally regulated. So, both power and money --> federal regulation of fracking.
Recommended by a reader:
Question on the Keystone, that was coming out of canada moving Tar Sands oil, which I thought was a lower quality oil. Why would you want Bakken Producers want to mix high quality bakken crude with it? Or does this happen anyways?
ReplyDeleteYou are quite correct. Very few folks realized that no Bakken operator was going to mix Bakken light sweet with Canadian tar sands. That's why I never cared about the Keystone XL in the first place.
DeleteBut at the time the Keystone XL was being promoted, most folks did not know that, including probably folks trying to kill the Keystone. Unintended consequences.
As an aside: it was all political theater - the governor of Montana refused to let the Keystone XL go through his state without a commitment of TransCanada to carry Bakken oil -- at the time, laymen did not know this was political theater. I don't know if the governor of Montana knew.
I do not recall if TransCanada was going to lay an adjacent pipeline to carry Bakken; I doubt it.
The pipelines coming out of North Dakota are carrying other oil that is not Bakken. I believe Bakken oil makes up about 60% of North Dakota production right now. I could be way off. It's been a long time since I looked at those numbers.
But yes, you are correct. But few knew that when Nebraska folks were speaking out against the pipeline and when the president killed it.
Knowledge that the Bakken Operators weren't interested in Keystone may have bolstered ONEOK's intent to build its first oil pipeline from the Bakken, bypassing Nebraska. If Romney were to be elected, maybe TransCanada can share the route with ONEOK for most of its pipeline.
DeleteAgree completely (about the Keystone/ONEOK piplines). I have often thought (but can't remember whether I posted it) that killing the Keystone XL offered opportunities for others (especially ONEOK and Enbridge.
DeleteI don't know if this is useful or interesting information for you but...
ReplyDeleteThese are the prices I got per barrel on my checks for July 2012.
Hess....$75.63
EOG.....$100.61
Brigham..$70.43
Interesting; thank you.
DeleteContracts, hedges, ceilings, floors, and locations where oil was delivered all part of the mix.
the on ramp for the Bakken crude into the proposed XL pipeline was Near Baker MT. A seperate pipeline capable of carrying approx 100,000 BOPD was to be built from Near Williston ND to Baker MT. this provision was the deal wanted by the govenors of MT and backed by the Govenor of ND.
ReplyDeleteThank you. I vaguely recalled a separate pipeline....if there had not been a separate pipeline then the Keystone XL carrying Canadian heavier oil made no sense for Bakken oil. Thank you.
DeleteI guess I was being too harsh on the Montana governor. Sorry.
Are you sure that pipeline companies are not capable of keeping different grades of crude separate?
ReplyDeleteIt would be great to have someone with pipeline knowledge respond to that question. This problem most likely has risen with the long history of pipelines and they have devised a way to send a divider down the line ahead and behind a certain grade on crude. I sure don’t know if this is true but you would think some engineer somewhere has design such a device.
Something you are fully aware of but it is good to see an article now and then to keep people reminded how disingenuous the faux-environmentalist are.
http://www.energytribune.com/22789/subsidizing-bird-kills-the-wind-industrys-preferences-include-exemptions-from-federal-prosecution-for-killing-wildlife
Perfect timing -- Don did answer that question: there was going to be a separate/adjacent pipeline. Once they have the easements/routes/it makes it easier to put in additional pipelines. I thought I had read that about the Keystone XL but had forgotten.
DeleteAnd yes, exemptions from federal prosecution for killing migratory birds has been talked about before. It's ludicrous, considering that several oil companies were charged with killing several ducks during the worse spring flood in decades, back in 2010. Even Mr Perry, CarpeDiem.com addressed the harassment of the oil and gas industry and the "free pass" given to slicers and dicers on these issues.
To me this seems like something I grew up with and that was protein in wheat we raised. The base line was 14% protein, 16% was worth more, 12% less.
ReplyDeleteThe grain was rated when delivered to the elevator and then mixed together. I have always wondered how it works with gasoline and oil. I have never heard of the divider in the pipeline.
Great analogy. I think that's another of the reasons rail has proved so successful. No mixing of grades of oil .
DeleteI'd like to thank Anon for sharing company prices per barrel. Wow, was that ever eye opening! I had no idea the difference could be that dramatic. I expect some slight variation between companies, but $25 and $30 higher??? I'd really like to know how EOG manages to set themselves apart from the pack. Way to go EOG! Meanwhile, I'm stuck with Brigham.
ReplyDeleteI had the same thought. Confirms my feelings that the television crawler is useful to traders, but doesn't often reflect more important issues -- what mineral owners are getting and how the Bakken operators are doing.
DeleteHello Bruce great site. I'm from Williston and I live at West Acres next door to your brothers old house. He had a well Ito the south of his house Davidson 1, drilled 1989, operated by Zenergy. Zenergy came in this fall and placed a combustor device in place of using the old flare pit. I believe the combustor is EPA mandated to protect us neighbors to the well. Regardless, when that thing would go off it sounded like a German V2 rocket with a pulse jet. It would shake the earth and consequently our houses randomly 10 to 20 times daily, intensely for a minute or two then gently subside. It took me 2 to 3 weeks to figure out the coincidence, I called Zenergy and Mr John Axtman of ND oil and gas and within 24 hous the line was flipped back to the flare pit and now the only rumbling is the BN trains rumbling by loaded with oil. Thanks for your great blog.
ReplyDeleteThank you for your kind comments about the blog. Of course, I know the area well. A lot of very good memories.
DeleteHmmm....amazing how often the EPA shows up in our "collective" lives.
I am impressed with your sleuthing -- figuring out the cause, and I am impressed with Zenergy's quick response.
And speaking of BN: I bet you hear a lot of rumbling....I find it incredible how things changed so rapidly for the rail industry in the Bakken...who wudda thought?
By the way, at the bottom of the sidebar on the right, there are two photos: one of our younger daughter on the Nile River. The other photo is of our older daughter riding a horse in front of an oil well. That was the oil well near your house/near Craig's former home. The photo was taken many years ago: I don't know if the pumper is still there. At the time Craig stabled two horses, his and our dad's. I forget which horse she was on; I was on the other one. I do remember the mosquitoes.
Delete"That's why I never cared about the Keystone XL in the first place."
ReplyDeleteYou sure know how to write a ton of posts on something you don't care about.
You are correct. I talked about that some time ago. When the Keystone XL was first proposed, I was trying very, very hard to stay solely with the Bakken. I thought the Keystone XL was just another pipeline story.
DeleteIn fact, when I started the blog, I had no interest in either the pipeline story or the natural gas story. I have learned a lot since, and I owe it all to my readers. I now follow the pipeline story (not just the Keystone, but all pipelines) and the natural gas story much more closely. RBN Energy has been particularly helpful. But I digress.
So, I thought the Keystone XL was just another pipeline story. I never, not in a million years, would have thought that the Keystone XL would become the story it has become. In my mind, it is the defining story in 2011 for the Obama administration regarding the oil and gas industry.
I still have no interest in how the Keystone XL pipeline story turns out; I am curious but not interested -- a fine line I know. I blog about it because some of my readers are interested in it.
If you scroll down to the bottom of the sidebar at the right, you will notice that the most visited post on my Bakken website has nothing to do with the Bakken, but rather the presidential race, or at least one half of it.
Hope that helps. Thank you for taking the time to write.
By the way, I am trying to limit stand-alone posts to the Bakken, and putting new information regarding non-Bakken items at already established posts. But I still will have many non-Bakken stand-alone posts because readers are sending me links they think are important. I try to make it clear in the subject headings when a story is not Bakken-related.
Incidentally, the blog was never intended to be solely about the Bakken (the "MillionDollarWay" welcome explains that). But, one can easily find something about the Bakken all the time on the blog. Although, for some, I know it may be challenging.
Bruce, Prince starts playing halfway through if you haven't already seen. The most entertaining guitarist since Hendrix in my opinion. Also you should check out his superbowl performance years back, another great performance.
ReplyDeletehttp://www.youtube.com/watch?v=zByqXu6nGYA
Wow, I had not seen this; don't know how I missed it.
DeleteHalf of the Traveling Wilburys joined by Prince honoring another of the Wilburys. Smile.
Thank you.