Skip to comments.The Barrel
Posted on 04/18/2011 5:45:05 AM PDT by ShadowAce
The US' Bakken Shale oil field, which spans Montana and North Dakota, has become so prolific that at least one big independent operator there estimates industry's output potential there at a whopping 1.2 million b/d by year-end 2016.
That's a heck of a lot of oil for a play that was barely breathing six or seven years ago. And that figure is even higher than the 700,000 b/d or so North Dakota officials were citing as a peak awhile back.
Continental Resources CEO Harold Hamm, presenting his estimate of a Bakken peak of 1.2 million b/d at Platts' Rockies Gas & Oil Conference in Denver this week, said volume girth in the play is expanding by around 5,000-10,000 b/d per month.
Other Bakken statistics, courtesy of Hamm: roughly 3,600 horizontal wells have been completed in the field to date "and we've just scratched the surface," he said. Industry is now adding about 2,100 wells a year. About 170 rigs are active in the play.
Production on the North Dakota side of the field is around 360,000 b/d, while Bentek Energy Senior Energy Analyst Jodi Quinnell said in a telephone interview that adding in Montana output brings the total output figure for the play to around 410,000 b/d. Bentek is owned by Platts.
Moreover, Hamm said a recent Continental study of the field's potential calculated recoverable oil potential of 24 billion barrels with today's technology. That number is substantially more than earlier US government estimates of as much as 4.38 billion barrels a couple of years ago, and that was up from a trifling 151 million barrels in 1995.
There seems to be no question that the Bakken can deliver, production-wise. But pipeline-wise, crude takeaway presents a problem. With so much oil oozing out of the ground, the Bakken needs more of it. Building new lines and finding new markets for it are big issues on the minds of both operators and pipelines these days.
Some of Bakken's production goes to Clearbrook, Minnesota, some directly to St James, Louisiana. But a large chunk goes to Cushing, Oklahoma where there is simply too much oil in storage right now. Steve Wuori, president of liquids pipelines for Enbridge, said there is now 55 million barrels of crude in storage at Cushing, which is likely a record amount.
Enbridge has a pipeline that takes Bakken's light sweet crude to Cushing, Oklahoma, as do other transporters. The crude arrives in Cushing via Illinois. But Wuori said Enbridge sees finding a non-Cushing and non-Midwest destination for the field's crude as a challenge for his company. He said 430,000 b/d worth of upgrades in some Midwest refineries to take more Canadian heavy crude will displace that capacity for light sweet in that area.
One solution Enbridge is mulling is to reverse a crude pipeline from Montreal to Sarnia, Ontario, which would enable Bakken crude to go to the East Coast US. Sarnia is not necessarily the only destination Enbridge has in mind, though. The company could reverse a pipeline at Portland, Maine that takes crude imports west, and from there unload crude and run it to Philadelphia or even St. John, New Brunswick refineries, he said.
Wuori would not say when or even whether Enbridge would make a decision on that option, adding it would depend on commercial support.
"When you hear the kind of talk we've heard about the bullishness of the play, it certainly looks like there's an urgency to it," he said.
And the cheapest gas in my area is $4.059?
Am I the only one who sees something amiss?
Nope. I read things like this and it just pisses me off
Some body has to pay the bonuses on wall street.
I think most of the price differences are due to state/local taxes.
Most of the country doesn’t have the boutique gas we do (or the taxes)...
Maybe it's refinery capacity. How many refineries have built in this country in the last ten years?
Combined with the fact that oil is a global commodity. There is about a $10 discount to the oil price at Cushing compared to comparable oil on the world market. But in a place like California, you are greatly dependent on imports and their pricing.
To my way of thinking, the stimulus money could have been better spent in building more refineries nearer the newer and more productive fields.
It’s telling that government will let private developers to take the hit for hard infrastructure developments all the while choking the life out them.
It's almost as if they were trying to cause the downfall of America.
But that would be silly, wouldn't it?
Not enough, if any at all...
According to the Heat Map, it looks like the Dem states pay more?
Look at IL/MO. As a long-time resident of MO, IL has always had higher taxes/higher gas prices.
States with higher taxes do tend to pay more in retail price.
We could have everyone from New York drive to North Dakota and fill up. Think of the money Minnesota would make selling chips and pop.