crude takeaway capacity

Necessity is the mother of invention, and the desperate need to transport increasing volumes of crude oil out of the severely pipeline-constrained Permian is spurring midstream companies and logistic folks in the play to be as creative as humanly possible. With the price spread between the Permian wells and the Gulf Coast exceeding $15/bbl in recent days — and possibly headed for $20/bbl or more soon — there's a huge financial incentive to quickly provide more takeaway capacity, either on existing pipelines or by truck or rail. Are more trucks and drivers available? Is there an idle refined-products pipe that could be put back into service? Could drag-reducing agents be added to an existing crude pipeline to boost its throughput? How quickly could that mothballed crude-by-rail terminal be restarted? Today, we discuss frenzied efforts in the Permian to add incremental crude takeaway capacity of any sort — and pronto.

During the oil market’s downturn from mid-2014 through 2016, the Bakken Shale, primarily located in North Dakota, was at the forefront of the collapse. The Bakken rig count dropped from a high of 219 to a low of 24 as production fell by 300 Mb/d, or 24%. For many, it was time to write off the Bakken as a one-hit wonder. But as drilling productivity increased and prices rebounded, so did production. Crude oil output is again above 1.1 MMb/d and the rig count has doubled from its low point. Today, we begin a blog series on recent developments in Bakken production, well productivity and market pricing, and discuss RBN’s latest production forecast for the play.

The crude oil-carrying Dakota Access Pipeline (DAPL) has been up and running for almost six months now, creating new market dynamics in the Bakken. But these changes haven’t garnered all that much attention — they’ve been overshadowed by talk of Permian production growth, Gulf Coast pricing and Cushing pipeline capacity. Now though, with news of super-long three-mile laterals and increasingly positive producer sentiment, the Bakken is once again shifting into the limelight — and the 525-Mb/d DAPL from western North Dakota to Patoka, IL is center-stage. Today, we discuss DAPL’s effects on Bakken crude prices, market access, other takeaway pipelines and crude by rail.