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Vol. 18, No. 3 Week of January 20, 2013
Providing coverage of Bakken oil and gas

Takeaway to beat output

North Dakota oil takeaway capacity continues to grow; gas takeaway catching up

Mike Ellerd

For Petroleum News Bakken

The latest North Dakota crude oil takeaway and production statistics and projections indicate that not only is takeaway capacity staying ahead of production, but with anticipated infrastructure growth, takeaway capacity is projected to stay far ahead of oil output in years to come. That’s per two key state energy agencies — the North Dakota Pipeline Authority and the Oil and Gas Division, under the Department of Minerals.

Pipeline Authority Director Justin Kringstad estimates that the combined pipeline and rail takeaway capacity for North Dakota crude oil will reach 1,538,000 barrels per day by the end of 2013, and by the end 2016 that total capacity is projected to reach 2,123,000 bpd.

In comparison, the latest North Dakota crude production estimates presented to the North Dakota House Appropriations Committee on Jan. 10 by Oil and Gas Division Director Lynn Helms, indicate a maximum possible future production of 1,600,000 bpd which could be reached at some point between 2015 and 2020, far below the projected takeaway capacity.

“It’s looking like with the combination of pipeline capacity as well as rail capacity that there will be an adequate means of moving oil production to market,” Kringstad told Petroleum News Bakken.

Takeaway projections

Presently rail takeaway capacity exceeds pipeline capacity, but Kringstad expects that balance to shift in the near future.

Kringstad has projected takeaway estimates through 2016, which is when all currently planned or proposed rail and pipeline projects are scheduled to be completed. If all planned and proposed rail facility projects and expansions are completed, Kringstad estimates that rail capacity will reach 880,000 bpd by the end of 2013 and will remain at that level with no additional projects or expansions on the drawing board.

On the other hand, if all planned and proposed pipeline projects are completed, pipeline capacity should reach approximately 918,000 bpd by the end of 2014, and increase to 1,243,000 barrels per day by the end of 2016. However, Kringstad cautions that some of the future projects are in the review or business development phase, and there is some level of uncertainty in his projections

Production projections

In his crude oil production projections, Helms considered a variety of factors that could affect production, including possible new fracking regulations, world economic outlook and tax structure changes that could reduce drilling capital. Under the high case scenario, production is estimated to reach the maximum of 1.6 million bpd between 2015 and 2020. In the low case scenario, on the other hand, production is estimated to only reach 800,000 bpd at some point between now and 2015. In yet another scenario, production is estimated to reach a maximum of 850,000 bpd between now and 2015, and Alison Ritter of the Oil and Gas Division says that is believed to be the most likely scenario and is the scenario the division is recommending the legislature use for budgeting purposes.

November 2012 takeaway stats

Preliminary takeaway statistics Kringstad presented to the House Energy and Natural Resources Committee on Jan. 11 indicate that railroads continue to take a lion’s share of total takeaway, accounting for 57 percent of total Williston Basin crude oil transport in North Dakota in November, up from 52 percent in October 2012. Conversely, pipeline’s transport share fell from 38 percent to 33 percent from October to November as production in the state decreased from 749,212 bpd to 733,078 bpd. In both October and November, tank trucking to Canadian pipelines accounted for 2 percent of crude transport, and another 8 percent of Williston Basin crude went to the Tesoro refinery at Mandan.

Pipeline Authority figures indicate that in November an estimated 453,000 to 483,000 barrels of crude oil were shipped by rail per day, up from the estimated 420,000 to 450,000 bpd in October. In comparison, an estimated 335,000 to 365,000 bpd were transported to markets through pipelines in November 2012, down from the estimated 380,000 to 405,000 bpd transported through pipe in October.

Burlington Northern Santa Fe currently serves 15 rail loading facilities throughout western North Dakota with another under construction at Fryburg and scheduled to go into operation in 2013. Canadian Pacific has four existing terminals, all in northwest North Dakota.

Increasing pipeline capacity

There are two major pipeline projects that are nearing completion and will increase pipeline capacity according to Kringstad. One of the projects is the Enbridge Bakken expansion which will increase capacity in the company’s Portal Link pipeline into Canada from 25,000 bpd to 140,000 bpd. The other pipeline project nearing completion is the Plains Bakken North pipeline with an expandable capacity of 75,000 bpd.

Gas takeaway

While the number of wells with and the number of wells without gas sales have been steadily increasing in recent years, in November the number of wells without gas sales fell slightly to 1,340 wells from 1,381 in October. The last time there was a downswing in the number of wells not connected to sales was in March 2012. The number of wells with gas sales increased from 5,591 in October to 5,708 in November, and these numbers come as good news as efforts continue to reduce flaring of natural gas in North Dakota.

The gas challenges, Kringstad told Petroleum News Bakken, are on the local scale in trying to get wells connected to the trunk lines or gas plants, and the real need, he said, is getting the small diameter, low pressure gathering pipelines in place. Gas companies, he said, are working hard to get these lines in the ground and get gas plants constructed and in operation as quickly as they can and he is confident that the gas infrastructure will eventually catch up with production.

The value of the gas provides incentives for the industry to capture it, Kringstad said. “There’s too much money on the table,” he says, “and that provides the incentive for the industry to capture it.”

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