RBN Energy: A Must-Read For Those Interested in the Bakken and California

Seldom is there an RBN Energy post that doesn't capture my interest, but today's post is excellent. It does the following:

• explains why California is an "island" unto itself when it comes to energy
• gives us a glimpse of why Alaskan oil production is declining
• how Bakken oil will benefit from the first two data points
• the Canadian, Permian, and Bakken oil will put further pressure on Alaska pricing; the Alaska "oil rush" is over (for now; and probably won't recover in my lifetime)

It really is one of those articles that folks interested in the Bakken should read.

These are the takeaway points that caught my interest:

• Alaska North Slope (ANS) crude oil production has been declining since 1987; and I didn't get a warm fuzzy that much was going to change any time soon;
• California is part of PADD 5; almost 50% -- half -- of all oil refined in PADD 5 is imported; it comes from Canada, Asia, and the Middle East; ANS oil is priced at Brent for the most part
• even newbies should know, by now, the delta between Brent and WTI
• WTI is priced at a discount due to oversupply at Cushing; my hunch -- this won't last forever (but I digress)
• there are no pipelines linking the west coast with supplies east of the Rockies; PADD 5 is an island, geographically and politically
• ANS pricing will change this year (2013) because Bakken oil will start reaching West Coast refineries by rail and barge, see next data point
• Bakken crude is priced against WTI and is $20/bbl cheaper than Alaska oil
• terminals are being built on the west coast to receive Bakken oil (previously posted at the MDW); good summary in the linked RBN Energy post
• rail again: US Development Group -- recently purchased by Plains All American -- is building a rail terminal in Bakersfield, CA, to receive crude from North Dakota
• Canadian crude oil is in a world of hurt: pricing is even worse for Canadian oil than WTI; the linked article explains why
• but Canadian oil will eventually reach California (new pipelines) and Alaska oil will suffer even more
• bottom line: the Alaska "oil rush" is over for the time being