The Army Corps of Engineers is said to be considering alternative routes for the most controversial segment of the Dakota Access Pipeline, which could help break the impasse that has stalled construction on that part of DAPL. If the 450-Mb/d crude oil delivery project gets back on track soon––something that no one knows for sure––an important two-part question remains: Where will the crude to fill the 450-Mb/d pipeline come from, and where will it be fed into DAPL? Today we look at the supply sources that will help fill one of the most important oil pipelines now under development.
The Williston Basin/Bakken production region was a Shale Revolution success story, with fast-rising crude oil output––from ~200 Mb/d in 2009 to a peak of ~1.2 MMb/d in December 2014––that quickly overwhelmed the only modest amounts of out-of-the-Bakken pipeline capacity that had been in place pre-revolution. The short-term strategy for winning this game of takeaway catch-up was to rapidly develop crude-by-rail (CBR) loading terminals that enabled incremental Bakken production to be transported by rail tankcar to East, West and Gulf Coast refineries; 21 CBR terminals with an astonishing 1.6 MMb/d of capacity were built to meet existing and expected production volumes. Gradually, new pipeline capacity out of western North Dakota was added; most recently, Kinder Morgan’s 485-mile Double H pipeline opened for business in February 2015; it can move up to 84 Mb/d from the Bakken production area near Dore, ND to Guernsey, WY, where Double H interconnects with Tallgrass Energy Partners’ 320-Mb/d Pony Express Pipeline to the crude hub at Cushing, OK (see This ‘Pony’ Knows More than One Trick). As we all know, Bakken production has fallen sharply since its peak nearly two years ago; in its October (2016) Drilling Productivity Report, the Energy Information Administration (EIA) estimated current production in the play at ~950 Mb/d, a roughly 300-Mb/d decline. Plummeting output has reduced the need for incremental pipeline takeaway capacity. Look at Figure 1, which shows Bakken production (shaded areas––more on these in a bit), combined pipeline-takeaway and in-region refining capacity (yellow line), and total pipeline-plus-refinery-plus-CBR capacity (blue line).