Wednesday, March 23, 2016

Bear Creek Natural Gas Processing Plant Should Be On-Line By Third Quarter 2016 -- March 23, 2016

From an earlier post, two natural gas processing plants were to be completed this year. At the time of the original post, I did not know the status of these processing plants. A reader provided the update -- ONEOK suspended plans for the Demicks Lake plant:
  • Demicks Lake, McKenzie, 200 MMcf/d -- announced July 30, 2014; to be completed in 2016; in this press release Oneok said more projects might be announced before the end of 2014; appears to have been revised upward to 400 MMcf/d in an article dated December 18, 2014. Update: see comments below -- this project was suspended; press release February 24, 2015.
  • Bear Creek, northwest Dunn County, 80 MMcf/d -- announced Sept 22, 2014; $300 million; to be completed 2Q16; 
Bear Creek will be the first natural gas processing plant in Dunn County.

Based on an article published in late 2015, the Bear Creek NG processing plant is now scheduled to be completed in the 3Q16.

I believe a ONEOK pipeline that would originate at the Bear Creek processing plant has just been approved. See this link

From The Bakken Magazine:

Based on reader's description, see first comment, the star in the graphic is about where the Bear Creek natural gas processing plant should be located:

Note CLR's Oakdale field is just to the northwest, as is Rattlesnake Point. Burlington Resources "controls" Corral Creek, also to the north, one of the best spots in the Bakken. I mention these fields because the wells in this area appear to be producing a fair amount of natural gas. There are a number of great fields in this area.

Investopedia On Target -- March 23, 2016

Starbucks closes all stores in Belgium. There are reports that ISIS has declared war on Europe, but might be targeting Americans. Fortunately it's just the JV team. President Obama should have no trouble taking them out.

Target Firing on Three Cylinders

We have a Target big-box store about five minutes (by bicycle) down the road from us. It's a bit of a pain, but we also have a Wal-Mart down that same road about 20 minutes from us (again, by bicycle).

Target used to be my go-to store when I needed something, let's say something for the bicycle or a kitchen utensil or even WD-40 oil. But recently I've noticed that Target has less and less the things I was looking for, and these are pretty basic things. I assumed it was just me.

But now Investopedia writes:
In 2015, Target announced that it would be focusing on four key segments of its retail operations, called signature categories. In that same statement, the company pledged to modify the grocery departments. However, in 2016, the company decided not only to focus on its signature categories of style, baby, kids and wellness, but to also expand fresh grocery product offerings as well as cut the number of products offered store-wide to focus on its best-sellers.
There are a number of long-term problems with this strategy. First, by cutting the number of products, Target is likely hoping to achieve similar cost-savings that Costco Wholesale Corp enjoys. The difference between the two is that Costco has an abnormally low number of SKUs in store, and Target cannot feasibly reduce its number of products that low. Instead, by culling moderately successful products, Target will create a situation where customers can no longer find everything they’re looking for, losing Target its status as a one-stop shop
How interesting.Wal-Mart has become not only my one-stop shop, but also my first choice when looking for something. Our daughter says Wal-Mart is also her go-to store; she no longer shops at Target. 

Interestingly enough, except for busy shopping days or busy shopping hours, I have found the checkout lines shorter at Wal-Mart than at Target.

Emerald Oil Files For Chapter 11 -- March 23, 2016; Buy High; Sell Low?

Bizjournal is reporting:
Emerald Oil Inc. said it's filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware. Its oil and gas operations are located in the Williston Basin of North Dakota and Montana.
Prior to the bankruptcy filing, Emerald said it reached a deal with Latium Enterprises Inc. of England to sell "substantially all of Emerald's assets" and to serve as a "stalking horse" in the bankruptcy process.
"The plan we are announcing today will provide for continuity in Emerald's current and future business operations. This process is the only path going forward and should enable the business to execute a turnaround in the current low oil price environment.
Importantly, Emerald's plan and the Latium transaction would allow the business to continue to operate and would provide a sound path for potential recovery for company stakeholders," said McAndrew Rudisill, president and CEO of Emerald, in a statement.
More here:
Emerald has obtained $20 million in post-petition debtor in possession financing to maintain operations during the restructuring. Prior to the Chapter 11 filing, Emerald executed a non-binding term sheet with privately-held Latium Enterprises under which Latium has proposed to purchase substantially all of Emerald’s assets and will serve as a “stalking horse” in a sale process under section 363 of the Bankruptcy Code. Shares of EOX are at $1.37 within a 52-week range of $0.39 – $19.00.  
As of December 31, 2014, the company controlled the rights to mineral leases covering approximately 122,000 net acres. 
$20 million / 122,000 net acres = $165/acre

From an earlier post, some history regarding Emerald Oil:
Looks like the Brits are getting a steal.

No New Permits; Enerplus, XTO Each With A Nice Bakken Well -- March 23,2 016

Two wells coming off confidential list Thursday:
  • 31353, SI/NC, Hess, BL-Davidson-155-96-0211H-7, Beaver Lodge, no production data,
  • 31366, SI/NC, SM Energy, Beaver 1B-28HN, Ambrose, no production data,
Active rigs:

Active Rigs32104198187206

No new permits.

Four (4) producing wells completed:
  • 29972, 1,643, Enerplus, Quilt 149-93-04D-03H, Mandaree, t2/16; cum --
  • 29974, 380, Enerplus, Thread 149-93-04D-03H, Mandaree, t2/16; cum --
  • 30256, 1,617, XTO, Tobacco Garden 11X-17E, Tobacco Garden, t2/16; cum --
32377, 36 (no typo), Prairie Hills Oil and Gas, McCarroll 1H, Grover, a Madison well, t3/16; cum --

Now They Know How TransCanada "Feels"
What's Good For Pipelines Is Good For Transmission Lines

From The New York Times:
Up and down the center of the country, winds rip across plains, ridges and plateaus, a belt of unharnessed energy capable of powering millions of customers, with enormous potential to help meet national goals to stem climate change.
And because the bulk of the demand is hundreds of miles away, companies are working to build a robust network of high-voltage transmission lines to get the power to the coasts.
If only it were that simple. In all, more than 3,100 miles of projects have yet to be built, in need of government approval.
One of the most ambitious projects, called the Grain Belt Express from a company called Clean Line Energy Partners, spent six years winning the go-ahead in three of the Midwestern states it would cross, only to hit a dead end in Missouri when state regulators voted 3 to 2 to stop the project. They were swayed by landowners like Jennifer Gatrel, who runs a midsize family cattle operation with her husband, Jeff, here in the northwestern part of the state.
She and other opponents made the usual arguments against trampling property rights through the use of eminent domain, obliterating their pastoral views and disrupting their way of life.
Two words fro Grain Belt Express: "go around." That is, "go around the state of Missouri.

Two North Dakota Pipeline Projects Move Forward -- March 23, 2016

Two North Dakota pipeline projects move forward. The Bismarck Tribune is reporting:
  • Oasis Midstream
    • 18.3 mile
    • origin: Wild Basin Gas Processing and Crude Handling Facility
    • terminus: Tesoro Johnsons Corner Station, 2.8 miles east of Johnsons Corner
    • from there: a 0.9 mile lateral line to the proposed Dakota Access Pipeline's Johnsons Corner Terminal
    • 75,000 bopd
    • three above-ground storage units at the Wild Basin facility
    • $13 million; construction to begin April, 2016; take about four months
  • ONEOK Pipeline
    • 38 mile
    • Dunn/McKenzie counties
    • origin: ONEOK Bear Creek Plant (Dunn County), northwest
    • connect with: ONEOK's existing Targa Pipeline east of US Highway 85, McKenzie County
    • 14,000 bbls NGLs -- will leave the state
    • $45 million; construction to begin this spring; to be completed by end of August, 2016 
    • I'm not sure, but I think the route of this pipeline can be seen at the map at this link (the upper graphic at that post) 

Among other things I spent the early afternoon correcting the spelling of the word "minuscule" on the blog. I was amazed how many times over the past seven years I have misspelled that word. About fifteen minutes after that project, I started reading an article in this week's issue of The New York Review of Books. And wouldn't you know, there on page 63, in an article about Stephen Spender:
... a few days later after he'd left with [W.H.] Auden a new poem and a diary entry about walking along the banks of the River Wye with Marston, Stephen received back a short note in Auden's almost illegible minuscule.
And there you have it.

I'm going to be off the net for awhile; I have responsibility for Sophia for the next several hours. Her mother is taking daughter #2 to watch a semi-professional soccer game somewhere in Dallas; May has daughter #1 and I have daughter #3.

18 Inches Of Snow Possible In Boulder

There are rumors that the Boulder, CO, global warming conference scheduled for Thursday has been canceled.

How Oil Is Formed -- A Note From Jones Oil Ireland -- March 23, 2016

This is kind of cool. I just received a personal note from "Kate" at Jones Oil Ireland -- a 100%-Irish company delivering oil and refined products to the counties in Ireland. She sent me a link to their site, "How Oil Is Formed." She must have known I used to teach as a substitute school teacher at the middle and high school levels.

Update, 1:56 p.m.: see first comment -- Jones Oil Ireland suggests that "we" will run out of oil in about 50 years. They must not have heard of the Bakken. Another Geico Rock Award nominee?

RBN Update On Bakken CBR To The West Coast
Pacific Northwest
Link here

West Coast market
  • somewhat different than the rest of the US
  • WTI vs Alaska North Slope (ANS) delivered to Long Beach, CA
  • ANS: the default crude processed by west coast refineries
  • if Bakken crude sells at a significant enough discount, CBR is economical
  • this post focuses on Pacific Northwest
  • later, RBN Energy will focus on California
  • much of CBR delivered to the PNW comes from the Bakken
  • California CBR mostly from Canada, New Mexico, the Rockies (Bakken?)
  • five (5) refineries -- all located in Washington State
  • total refinery capacity: 647,000 bopd
  • all process ANS
  • no pipeline network to deliver US inland crude to the PNW
  • Five refineries (now/future Mb/d):
    • Tesoro: 50 / 120
    • BP: 60 / 234
    • Phillips 66: 30/101
    • Trailstone (US Oil Refining): 40 / 42
    • BP: 0 / 65 -- held up by Environmental Impact Study
  • Bakken: $37.24
  • ANS: $39.26 (apparently that includes the sea-going tanker rate)
  • Bakken CBR: add $10.39/bbl)
  • thus: an $8 penalty to use Bakken oil
Take-or-pay / other long-term commmitments
  • other "incentives" keep Bakken CBR moving to the PNW 

US Crude Oil Stocks Continue To Climb -- March 23, 2016

For the Kennedy patriarch who thought the grandkids would never see snow again, breaking news now:
  • Denver International Airport sets new daily snowfall record with 12.1 inches of snow recorded today, breaking previous daily record of 8 inches set in 2010
  • Record-breaking 15 inches of snow in Boulder, CO, as storm continues
  • Denver International Airport closed 'until further notice' as blizzard hits area; Pena Boulevard is impassable


Some big things are happening. Some of these no doubt are being driven by a) ObamaCare; and, b) the increasing cost of electricity (due to state-mandated wind and solar energy). When I read this, I wonder if it makes sense to hire tens of thousands employees (all of whom are liability threats, and all of whom are required to have ObamaCare) and pay outrageous utility bills due to solar farms or simply outsource that to iCloud, Google, or Amazon. From Business Insider:
This does not mean that Netflix is abandoning Amazon for Google, given that only last month, [Netflix] finished a massive decade-long project to shut down its own data centers and use Amazon's cloud exclusively to run its business. (Netflix's move to go all-in on Amazon has encouraged others to do the same, including tech companies like Juniper and Intuit.)

My go-to DVD-watching in the evening is the television series, Columbo. I have the first four seasons and watch them off and on, every so often.

While bike riding I like to think of my favorite episodes. This is what it comes down to:
  • the episodes with Jack Cassidy are my favorite (he was in two or three)
  • the episodes with Robert Culp are my second group of favorites (Culp was also in two or three)
  • the one with the symphony conductor and the Hollywood Bowl
  • the one with the actress who buried her husband in the back yard under the fountain 
  • the one with the exploding cigar
  • the one with Dick Van Dyke
  • the one with Robert Conrad 
  • maybe the one with the twin brothers
  • The first two (Jack Cassidy / Robert Culp) are likely to remain at the top. The others will move around, some moving back and forth from the list
So, let's see what others say.

Best episodes of Columbo:
  • "Murder by the Book," Jack Cassidy (yes, this may be my favorite, also)
  • "Now You See Him," Season 5 -- I haven't seen it
  • "Any Old Port in a Storm," yest that was good; I had forgotten it; has to be in my top ten list
  • "Swan Song," Johnny Cash -- one of my least favorites, but I can see why it made the list
  • "Double Exposure," with Robert Culp
  • "An Exercise in Fatality," with Rober Culp
  • "A Stitch in Crime," yes, another good one, with Spock
  • "Negative Reaction," with Dick Van Dyke
  • "Etude in Black," as noted above in my list
  • "Death Lends a Hand," with Robert Culp
Another top-10 list:
  • "Murder by the Book," Jack Cassidy (yes, this may be my favorite, also) -- shows up #1 again
  • "Blueprint for Murder," yes, one of my favorites
  • "Etude in Black," as noted above in my list
  • "A Friend in Need," yes, I agree; I had forgotten
  • "Identity Crisis," season 5, I haven't seen
  • "The Bye-Bye Sky High IQ Murder Case," season 6, I haven't seen
  • "Try and Catch Me, season 7, I haven't seen
  • Columbo Goes to the Guillotine, season 8, I haven't seen
  • "Butterfly in Shades of Grey," season 12 -- are you kidding, 12 seasons? I haven't seen
  • "Murder by the Book," led the list again
Marketwatch, also has a list of five
  • "Murder by the Book" is not even on the top 5
  • "Murder by the Book" was #5
  • "The Bye-Bye Sky High IQ Murder Case," was #1; Jamie Lee Curtis made her screen debut in this one as a surly young waitress who confiscates Columbo's donut
Most of the top ten lists are similar and the preponderance of "best" episodes occur in the first four seasons. 

Why I Love Blogging! Things Are A Whole Lot Better Worldwide Than One Might Think -- March 23, 2016

This is really a cool story: Djibouti in BloombergBusiness. Well worth the read. Reminds me of my days in Decimomannu, Sardinia, where US airmen hung out with fighter pilots from all over Europe.

I always wondered whatever happened to the Somali pirates.

Wednesday, March 23, 2016

Weekly petroleum statistics from EIA:
U.S. crude oil refinery inputs averaged over 15.8 million barrels per day during the week ending March 18, 2016, 176,000 barrels per day less than the previous week’s average.
Refineries operated at 88.4% of their operable capacity last week.
Gasoline production decreased last week, averaging 9.7 million barrels per day. Distillate fuel production decreased last week, averaging over 4.7 million barrels per day.
U.S. crude oil imports averaged 8.4 milli on barrels per day last week, up by 691,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 8.1 million barrels per day, 11.6% ab ove the same four-week period last year.
Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 415,000 barrels per day. Distillate fuel imports averaged 93,000 barrels per day last week. 
New York Auto Show: I don't know if Tesla showed up, but it did not make the top 5 list. The 5 top stars at the NYC auto show: 
  • Acura MDX (2017)
  • Nissan GT-R (2017)
  • Lincoln Navigator (2017)
  • Toyota Highlander (2017)
  • Subaru Impreza (2017)
Canada is its own worse enemy, from Platts:
With the current assumption that a crude export pipeline from Alberta to the US Gulf Coast is unlikely to ever be built, never has there been a better opportunity for Canada’s provinces to join hands and hasten efforts to open up oil export outlets along the country’s Pacific and Atlantic coasts.
Be it the recent rejection by the US government of the Keystone XL Pipeline — described by Alberta Premier Rachel Notley as a “kick in the teeth” — or the low-level east-west rivalry between the provinces to get a trans-Canadian oil export pipeline built, consensus building and not antagonism is a discerning aspect of the confederation.
A new issue is, however, brewing between Alberta and British Columbia that, instead of pulling the provinces together to optimize the value of the nation’s crude oil resources, is putting them at loggerheads.
In early March, Alberta’s energy minister Margaret McCuaig-Boyd said that the province would not buy additional electricity from neighbor British Columbia unless the latter lends its support for an oil export pipeline through that province.
The next day Notley said: “We’ve just got to get our product to other markets. We’re not necessarily going to have that much demand for electricity if we can’t find someone to sell our products to.”
Neighbors wanting to talk about new power lines crossing provincial borders need to understand that the issue is tied to inter-jurisdictional product distribution infrastructure, like pipelines to carry bitumen to tidewater.
(Re-posted) ObamaCare:although the reasons for a change in Coca-Cola's business plans had nothing to do with ObamaCare based on information available, one wonders. Coca-Cola's business plan has been in the works for quite some time, but it is now being accelerated out of "fear, anxiety" that it could become a takeover target. But when I see the employee numbers before/after it only makes me think that Coca-Cola is cutting employee costs due to ObamaCare. From today's Wall Street Journal:
Operating margin will jump to 34% from 23% and head count will shrink to 39,000 from 123,000 as capital-intensive factories, warehouses and trucks come off its balance sheet.
Again, for those who missed it: by jettisoning 100,000 employees from their payrolls (think pensions, ObamaCare, OSHA rules, and federal regulations), Coke's margins will jump from 23% to 34%. The employees will still have jobs but their contracts will be re-written and less generous no doubt working for a company with pockets not nearly as deep as Coke's. 

Back To The Bakken From Space -- March 23, 2016

The real story regarding those nighttime photographs of the Bakken some years ago: turns out the photographs were "inaccurately derived flare images that are usually highly process, manipulated, and often amplified 100x."

The report from the UND EERC at this link, a pdf.

The Apple Page

Regular readers are probably aware that I am "Apple Fanboy #3" -- a handle/moniker/hashtag/whatever that was my first "screen name" years ago. My "love" for Apple has not changed over the years.

I often wish Tim Cook would announce that he was taking the company private and that the company would be owned 100% by its employees. I never liked the "business" part of Apple. I always enjoyed Apple for how Steve Jobs must have envisioned it.

Be that as it may, we had another great experience in the local Apple store yesterday afternoon.

Yes, May got her Apple Watch. It is incredible. May is not particularly geeky or techie but she fell in love with it immediately. The buying experience was incredible. We had gone in Saturday afternoon to make our selection but planned to wait until after the Tim Cook presentation Monday. It also gave me time to call the bank and let them know an "unusual" charge would be coming through.

Rarely, very rarely, we pair up with an Apple employee who fails to meet the standards of what we have come to expect. That happened yesterday; the sales woman was out of her league. I assume she was relatively new to the store and she will eventually find her niche: mostly likely in the back room doing inventory where she does not have to smile, or really interact with other human beings.

Fortunately we had already picked out our watch a couple days earlier. May confirmed that was the one she wanted, and the Apple person brought us over to "Holt," who would guide May through the "pairing process" -- the process in which one paired the Apple Watch with the iPhone.

"Holt" -- short for "holster" no doubt -- a nickname he probably picked up in another life, another time -- was outstanding. This has to be one of the most boring jobs in the world, like watching paint dry when watching two mobile devices sync. It took about 5 minutes but would have taken one (1) minute had May not bothered to read the legal disclaimer. My hunch is she was the first person to have ever read the legal disclaimer when it popped up on the iPhone and by the 19th page, she, too, was skimming through it.

I'll look later to see if the legal disclaimer absolves Apple of any liability when using the Apple Watch to blow up an airport.

She paired it up, and the first thing that popped up was an alert reminding us that it was our oldest daughter's birthday this weekend. I am kidding you not. That was the first alert. We have a photograph of that.

On the way home, May left her iPhone in her purse, and made a "Dick Tracy" phone call from her new Apple Watch.

Later, she had an incoming phone call. Reflexively she went to her purse, but I reminded her to "answer" on her watch. She did and she never once got her iPhone out. I loved it. She actually spent more time with me than with her iPhone and she was always connected.

The penetration rate for the iPhone, the Android, the cell phone, whatever, was phenomenal. There was nothing in the past that compared with that penetration rate, except perhaps the Battle of the Bulge, until slowed by General Patton.

The penetration rate for the Apple Watch, the 'droid Watch, the cell watch, whatever, has been much, much slower. I was never surprised by that.

Yesterday afternoon, at the middle school track meet, in which our oldest granddaughter participated in the 2 x 400 relay, and the 300-meter hurdles, I noted that about 50% of the women all held their iPhones. It was so refreshing to see May arrive without her iPhone but 100% connected. She "wrist" called me to find out where I was.

Later in the evening, when we stopped by the granddaughters' house, May showed the Apple Watch to the 9-year-old. She had not held one before. Within nano-seconds, she was clicking, tapping, pressing, surfing, glancing through the Apple Watch with the greatest of ease, doing things we were not aware the watch could do.

The penetration rate for the "Dick Tracy" watch has been slow, as noted above, but the "S" curve will become steeper over the next couple of years. I wouldn't be surprised if the Apple Watch is on the top ten Christmas list this year. Bands will become anniversary gifts, birthday presents, and throwaways. There must be a gazillion of them; they are all interchangeable (they all work with all the watches); and, they range in price from free (come with the watch), to $49 for least expensive add on, to tens of thousands of dollars.

I wanted to get May the Milanese loop but she preferred something else and that's what she got.

Mid-Week Observations -- March 23, 2016

LOL: I see that President Obama has said the "trading embargo" on Cuba could end. It would have been nice to see President Obama announce that the "trading embargo" with Canada was also over. 

LOL. From the front page of The Wall Street Journal this morning:
The Justice Department’s move to postpone a showdown with Apple over unlocking a terrorist’s iPhone appears to be a victory for Apple. But it comes at a cost: the suggestion that there may be a gap in Apple’s software. 
First of all, "they" haven't hacked the iPhone; they still haven't cracked the code; they haven't found a back way in. 

Second: it looks like the FBI required "all the king's men" and they still might not have the phone cracked. 

Something tells me Apple isn't too worried ... and they are working on stronger encryption anyway. 

Politics: it appears that folks are losing interest with the primaries now that the GOP has announced the primaries no longer count. The results of yesterday's primaries merited a Drudge headline but that was about all. Jeb Bush endorses Ted Cruz.

Apple Watch: "don't leave home without it." Yes, my wife loves her Apple Watch and will never leave home without it.

Brussels: the "single black glove." Too bad the western world (outside of Israel) frowns upon profiling.

ObamaCare: although the reasons for a change in Coca-Cola's business plans had nothing to do with ObamaCare based on information available, one wonders. Coca-Cola's business plan has been in the works for quite some time, but it is now being accelerated out of "fear, anxiety" that it could become a takeover target. But when I see the employee numbers before/after it only makes me think that Coca-Cola is cutting employee costs due to ObamaCare. From today's Wall Street Journal:
Operating margin will jump to 34% from 23% and head count will shrink to 39,000 from 123,000 as capital-intensive factories, warehouses and trucks come off its balance sheet.
Again, for those who missed it: by jettisoning 100,000 employees from their payrolls (think pensions, ObamaCare, OSHA rules, and federal regulations), Coke's margins will jump from 23% to 34%. The employees will still have jobs but their contracts will be re-written and less generous no doubt working for a company with pockets not nearly as deep as Coke's. 

Bakken CBR To Pacific Northwest -- Update, RBN Energy -- Wednesday, March 23, 2016

Active rigs:

Active Rigs32104198187206

RBN Energy: CBR from the Bakken to the northwest is alive and well. More detailed look here if that link breaks.
Most of the crude by rail  (CBR) shipments to 4 refineries in Washington State are ex-North Dakota from where rail freight costs are over $10/Bbl. Bakken crude from North Dakota competes at Washington refineries with Alaska North Slope (ANS) shipped down from Valdez, AK.
Back in 2012 ANS prices were more than $20/Bbl higher than Bakken crude – easily covering the rail cost. In 2016 so far the ANS premium to Bakken has averaged well below the $10/Bbl freight cost making CBR shipments uneconomic. But as we discuss today - Northwest refiners are still shipping significant volumes of crude from North Dakota.
This is Part 6 in our series updating the sorry state of the CBR business in North America in 2016 compared to its heyday a few years back.
In Part 1 of this series we noted CBR declines in response to narrower spreads between U.S. domestic crude benchmark WTI and international equivalent Brent. The lower spreads reduce the incentive to move crude from inland basins to coastal refineries by rail because the latter is a more expensive transport option compared to pipelines. CBR became a big deal when WTI was discounted to Brent by upwards of $25/Bbl in 2011 and 2012 because of congestion caused by a lack of pipeline capacity. Back then it made sense to use rail to get stranded crude to market. As a result U.S. CBR shipments grew from 33 Mb/d in January 2010 to a peak of 928 Mb/d in October 2014 (according to Energy Information Administration - EIA). As new pipelines have been built out to provide less expensive options to get stranded crude to market so the WTI discount has narrowed and CBR traffic has declined. Primarily in response to the narrowing spread – overall CBR volumes fell during 2015 but not as fast as you might expect – dropping only 30% between January and December 2015 (latest EIA data) even though spot market economics for rail shipments often made no sense.
As we discussed in Part 2 – looking at the epicenter of the CBR boom in North Dakota – the slower than expected decline in rail shipments is mostly because committed shippers and refiners continue to use rail infrastructure that they invested in (and made take-or-pay commitments to) and because some routes do not have pipeline access (East Coast and West Coast).
In Part 3 we looked at CBR traffic out of the Niobrara shale region in the Rockies. Midstream companies continue the build out and expansion of rail terminals as well as new pipelines in this region even though production has leveled off. In Part 4 we looked at the fate of CBR load terminals in Western Canada that are “overbuilt and underutilized”. In Part 5 we turned to CBR market destinations – beginning with the East Coast. This time we begin a two-part look at CBR unloading on the West Coast.