Updates
Later, 9:38 pm: with the news below in the original post, it will be interesting to see how this next one goes -- Oneok Partners LP is holding an open season for its previously announced 600-mile Bakken NGL Pipeline, which will transport unfractionated natural gas liquids from the Bakken shale in the Williston basin to an interconnection with its 50%-owned Overland Pass Pipeline in northern Colorado. Oneok expects the 60,0000-b/d pipeline—now under construction—to enter into service in first-quarter 2013.
Original Post
Link to press release here. ONEOK Partners, L.P. today announced that it did not receive sufficient long-term transportation commitments during its recently concluded open season for the Bakken Crude Express Pipeline. As a result, the partnership has elected not to proceed with plans to construct the pipeline.
“Despite the robust outlook for crude-oil supply growth in the Williston Basin in the Bakken Shale, we did not receive sufficient long-term commitments under the terms we needed to construct the Bakken Crude Express Pipeline,” said Terry K. Spencer, ONEOK Partners president.
“While we are disappointed with the results of the open season, we remain committed to serving Williston Basin producers for their natural gas, natural gas liquids and crude-oil infrastructure needs. We still believe the Bakken Crude Express has a competitive advantage over other competing projects due to its proximity to the route of our Bakken NGL Pipeline currently under construction and other ONEOK Partners natural gas liquids pipeline corridors,” Spencer added.This is quite a turn of events.
I'm guessing the operators really like the flexibility of rail
ReplyDeleteI have to agree.
DeleteAnd, if there is any truth to that (time will tell), it will be yet another way that the Bakken has changed things.
The rails are scalable. We'll see how scalable. Smile.
It is hard to compete with the ability of rail to deliver product anywhere in the US. Though two things make me wonder if crude by rail will lose its lustre in a few years;
ReplyDeleteFirst, as demand builds rail rates will continue to rise (because the market will bear it, and because equipment and tracks get tighter). Ultimately they may price pipelines back into the picture.
Secondly, there is the full press effort to kill all fossil fuels. Here in MT the enviro extremists are already using the excuse of increased rail traffic as a means to try stop new coal production. With the prospect of 8 or 10 additional oil trains per day, you can safely bet they'll come after oil with the same tactics. Obviously not every train will be on the same tracks, but expect this same response even if it's two trains per day. Then the activists try to build discontent in each and every community the train passes through. It's the same tactic used to kill new pipelines, though they make the case against existing rail lines.
I will have a stand-alone post on some of my thoughts later today, now that I have a chance to think about this, and after reading some comments.
DeleteThe problem with this pipeline seemed two fold:
ReplyDeleteThe quality of Bakken crude is so high - premium crude for refining - that the premium is lost after mixing. A pipeline to the Gulf Coast from Cushing has to be dedicated to maintain that premium, and there are few Cushing outlet pipelines sized for that rate.
The pipeline doesn't go to an end user location, and maintain integrity, without additional modes of transport.
For that matter, mixing Bakken crude with Canadian oil sand has th same loss of quality issue.
You are so correct. When I saw that at Cushing they would be mixing Bakken and Canadian sands oil, it changed everything. Thank you for a great comment.
DeleteI hope to do a stand-alone post on this later today.