As crude oil production continues to grow in the Western Canadian Sedimentary Basin, more pipeline capacity will be needed. The 590-Mb/d Trans Mountain Expansion in 2024 temporarily provided a period of surplus capacity, but that is shrinking. Today, we go through all the projects in the works.
With crude prices in the $60s, oil-producing basins other than the Permian are finally seeing signs of life, and that includes the Rockies. But volumes flowing through the most important Rockies crude oil hub — at Guernsey, WY — are down. Moreover, the price of oil at Guernsey is up, trading at least flat and sometimes at a premium to the downstream market at Cushing, OK, suggesting that committed shippers are having to bid up the price at Guernsey to secure barrels for their downstream pipeline commitments. What about production from the nearby Powder River Basin? Well, Powder River oil production is up, and the rig count there is double what it was this time last year, so you might think there would be more than enough barrels at Guernsey. But not so. Who’s to blame? We need to look no further than the Bakken and the Dakota Access Pipeline (DAPL) to discover our culprits. Today, we check in on the market at Guernsey and consider the impact of DAPL, the implications for Rockies crude oil outflows, and what it all means for Guernsey price differentials.
Last week we reviewed prospects for oil production from the Niobrara shale formation in Colorado and Wyoming (see Bananarama in the Rockies). Despite early promise the Niobrara has proven complex to drill successfully but recent optimism from Noble Energy,Anadarko and others suggest that the tide may be turning. Today we take a look at growing takeaway capacity in the Rocky Mountains.
