Tough times in the crude oil sector generally affect all participants to some degree, but the impacts can vary widely by production basin. We saw that back in 2014-16, when the crash in oil prices battered the Eagle Ford, Bakken, and Niobrara but left the Permian unscathed — production there actually kept rising. Fast-forward to 2020, with its COVID-induced demand destruction, anemic prices, and uncertain-at-best recovery, and again the Bakken really took it on the chin. Production in the basin plummeted by 28% in one month — from April to May — and while Bakken output rebounded this summer, the rig count has been hovering at its lowest level in memory and another, albeit slower production decline may be imminent. Today, we discuss the challenges facing exploration and production companies in western North Dakota.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
As we said a couple of months ago in Dakota, our Drill Down report on Bakken crude oil gathering systems, the Bakken was one of the first shale plays to demonstrate the promise and potential of horizontal drilling and hydraulic fracturing in the production of crude oil. As shown in Figure 1, between the beginning of 2010 and the end of 2014, Bakken crude production soared by 400%, from ~250 Mb/d to ~1.26 MMb/d, according to the Energy Information Administration (EIA). But the mid-decade collapse in oil prices knocked the Bakken to its knees. By December 2016, crude production there had fallen to less than 960 Mb/d (blue area), and the number of active rigs in the play had dropped to 32, from 182 rigs two years earlier (green line).
Bakken producers soon got back on their feet, though. Crude oil prices rebounded, E&Ps significantly reduced their drilling-and-completion costs and increased their wells’ productivity, and — especially important for the Bakken, which remained chronically short of pipeline takeaway capacity through its initial 2010-14 growth spurt — the Dakota Access Pipeline (DAPL) to Patoka, IL, came online in June 2017. DAPL, which started out with a capacity of 470 Mb/d and has since been expanded to 570 Mb/d, freed many Bakken producers and shippers from their reliance on crude-by-rail and slashed the cost of delivering the play’s light crude to market. (More on DAPL in a moment.)
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About the song
"House of Pain” was written by Eddie Van Halen, Alex Van Halen, Michael Anthony and David Lee Roth. It appears on the B-side of the Van Halen’s hit single, “Jump,” and as last song on side two of Van Halen's sixth studio album, 1984. The LP was the last to feature all four of the band’s original members, including Eddie Van Halen, who passed away on Tuesday, October 6, at the age of 65.
Rolling Stone magazine ranked 1984 as #81 on its list of the 100 Greatest Albums of the 1980s; in its review, the publication said, “Eddie Van Halen discovered the synthesizer." The LP reached #2 on the Billboard Top 200 Albums chart, remaining there for five weeks, behind Michael Jackson’s Thriller, on which Eddie Van Halen made a guest performance. 1984 produced four singles: “Jump,” “Panama,” “I’ll Wait,” and “Hot for Teacher.” The album was certified Diamond by the Recording Industry Association of American, signifying that it sold more than 10 million copies.
Van Halen was an American rock band formed in Pasadena, CA, in 1972. The band has had eight members pass through its ranks — only the Van Halen brothers remained in the band since its formation. The group has released 12 studio albums, two live albums, two compilation albums and 56 singles. They have sold over 80 million records worldwide. Van Halen has won one American Music Award, one Grammy Award and four MTV Video Music Awards. We all mourn Eddie’s passing.
