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Easing Bakken bottleneck NEB gives green light to Enbridge pipeline to major North American refinery markets; Enbridge exec calls potential ‘tremendous’ Gary Park For Petroleum News
An affiliate of Canadian pipeline company Enbridge has regulatory approval to proceed with building a transportation link from the prolific but pipeline-constrained Bakken oil formation in North Dakota, Montana and Saskatchewan.
Canada’s National Energy Board has given the go-ahead for Enbridge to complete an expanded system from Berthold, N.D., to Cromer, Manitoba, to access Enbridge’s mainline serving the North American refinery markets in the U.S. Midwest and Midcontinent and eastern Canada.
The C$180 million development, with initial capacity of 145,000 barrels per day, has a scheduled in-service date of early 2013.
The NEB said it decided there is enough commercial interest to support the Bakken Pipeline and sufficient oil supply markets for the projected production.
Perry Schuldhaus, Enbridge’s vice president of regional pipeline development, said the project is part of his company’s “broader expansion plans” for the Bakken.
“The growth potential in the region is tremendous,” he said. “With our existing infrastructure and the proximity of our mainline system, Enbridge is well-positioned to capture opportunities created by increasing production.”
Insufficient takeaway The Bakken, rated as the largest unconventional oil discovery in the United States, yields light, sweet oil of a higher quality than U.S. benchmark West Texas Intermediate, but fetches US$6-$8 per barrel less than WTI because of insufficient takeaway capacity.
Growing uncertainty over the future of TransCanada’s planned Keystone XL pipeline, which would have tied in to the Bakken, has created an even greater sense of urgency to find outlets for Bakken oil.
In October, Enbridge announced a US$90 million Bakken access program, which included increasing gathering pipeline capacities, building more storage tanks and adding truck access facilities in western North Dakota.
The use of rail to carry crude out of the region has also been rapidly gathering pace.
Over the past six years, output from the Bakken shale has soared in the U.S. and Canada to 550,000 bpd and is conservatively forecast to peak at just over 1 million bpd in 2020.
Saskatchewan has 25% The U.S. Geological Survey has estimated the Bakken formation, of which about 25 percent is in Saskatchewan, has 4.3 billion barrels of recoverable oil using already-dated 2007 technology.
The NEB, in a Dec. 20 report, characterized the development of Western Canada’s light, tight oil resources as “in its infancy” at 160,000 bpd this year.
Noting that 80 percent of wells drilled into “very low permeability formations” in the region have horizontal legs, NEB said it is “too early to estimate with any degree of confidence what the ultimate impact of exploiting tight oil plays in Western Canada might be.”
In addition to the Bakken, it included the Viking in Alberta and Saskatchewan, Cardium, Montney/Doig, Duvernay/Muska, and Beaver Lake in Alberta, Lower Shaunavon in Saskatchewan and Lower Amaranth in Manitoba on its list of leading tight oil plays.
New refinery planned The rising output in the U.S. Bakken has prompted privately owned Dakota Oil Processing to invest US$200 million in building a 20,000 bpd refinery in North Dakota — the first new refinery in the U.S. in 35 years.
With Keystone XL struggling to stay afloat and producers in the Bakken and Alberta oil sands desperate to obtain market access, a joint venture of Enbridge and Enterprise Products Partners said Dec. 20 they will conduct an open season from Jan. 4 to Feb. 10 for an expansion of the Seaway pipeline they plan to reverse to allow crude shipments from Cushing, Okla., to the Texas Gulf Coast and an extension of Seaway to the Port Arthur-Beaumont refining market.
The reversed pipeline is expected to have initial capacity of 150,000 bpd by the second quarter of 2012 and expand to 400,000 bpd by early 2013.
Enbridge also said it has received sufficient shipper commitments to proceed with its Flanagan, Ill., to Cushing, Okla., crude line that will have initial capacity of 400,000 bpd, expandable to 550,000 bpd, and also provide an outlet from the Bakken.
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