Updates
November 27, 2012: in a comment, someone asked about the relative contribution of rail, truck, barge, and pipeline for shipping Bakken oil. A reader provided me this PDF, from Alter Logistics Company.
Original Post
This is really something: a Bakken shale logistics conference in Houston -- the second one.
This conference is response to the sudden challenge being faced by U.S. petroleum companies who are pumping crude out of the Bakken shale in North Dakota and Montana. The sudden increase in volume has resulted in the problem that the companies are having problems shipping the crude to the refineries.
Truck and rail are being used and the volume has put an enormous strain on the supply of tank cars and available tank trucks.
This conference is a follow up to our highly successful 2012 Bakken Crude Oil Logistics Conference, where we had over 135 attendees, numerous sponsors, and a great lineup of speakers. This event is organized to help bring together the crude producers, the rail companies, truckers, barges, and those who provide technology solutions to help develop a more efficient supply chain.It looks like the only major mode of transportation not moving oil out of the Bakken: airlines.
Announcement here: Bakken Crude Oil Logistics Conference, March 7 - 8, 2013.
Notice where its being held Houston. These conferences were first being held in ND, then Denver, now a Bakken infrastructure conference in Houston. They have taken the show to Big Oil. On the investment side, similar type programs were done in North Dakota, Minnesota. Last summer I presented in Chicago, and recently the group I deal with went to Wall Street and had over 200 in attendance. Kent
ReplyDeleteYes, I noticed that also. I was quite surprised that it was a "national" announcement, and then when I read it, to see that it was being held in Houston. You are correct; that speaks volumes. Someone is getting serious about the takeaway issue ... and, of course, that will spill over into other areas of investment and opportunity.
DeleteToday, two big stories were posted: one, the first shipment of Bakken oil by rail reaching Washington State (west coast); and, second, the Enbridge story of Enbridge Rail bringing Bakken oil to the Delta Airlines refinery, Philadelphia, east coast.
I am going to follow up a little bit more on this. Lets say and I will use a lot of round numbers, on this, 2,000 wells, 10 million each. 20 billion. Lets say 500,000 barrels a day can be shipped in alternative methods and or away from the Cushing OK bottleneck. By utilizing an alternative method, Barge, Rail, ship to different refinery, lets say producers get 4/barrel more (not unrealistic), that is 2 million more dollars a day to producers. That is 1.4 billion a year. That is an additional 7% to on the total cost of the drilling. So my getting manageble transportation costs (always the big hang up in developing a manufacturing base in ND, we were too far from the Market), rate of returns increase and more will come to ND...... This was a big issue on the recent Denver conference I attended. Kent (and also the math they used)
ReplyDeletePardon my interruption...sorry.
DeleteGreat comments, as always. Thank you.
Bruce, I'm working on a break down of the transportation problems of oil in the Bakken. Do you happen to have a rough estimate of the percentage that is railed, trucked, piped and barged? Any numbers would be great, even rough estimates would do just fine. I've heard so many different numbers so I'm putting them together to try and find a nice mean. Thanks in advance for your help.
ReplyDeleteThat question comes up a lot.
DeleteIf I were going to research it, I would start by defining the parameters:
a) local (first 25 miles from the wellhead)
b) in-state (from local to first regional terminal)
c) terminal leading out of state
a) The first 25 miles: I believe NDIC says as much as 95% of North Dakota oil is still trucked; it might be down to 75% but I think it's closer to 95%; Lynn Helms often quotes the number in the monthly Director's Cut.
b) In-state data is relatively easy to come by comparatively speaking: check out the Whiting corporate presentations (and most other Bakken-centric producer presentations): they provide takeaway capacity, rail vs pipeline. I think it's around 60/40 now, but I could be way off; the presentations will have more accurate data.
c) Once the oil leaves the state by rail or pipeline, I assume 90% of that reaches it terminus by the same route. A small amount of crude-by-rail would be moved from unit trains to barges. I have no idea what that amount would be but searching the site for "barge" would be a starting point.
d) A small amount of oil is trucked from North Dakota across the border into Canada, but I believe it is Spearfish oil; regardless, it's a relatively small amount.