Buoyed by record crude oil flows and the expectation of further growth in Western Canada, Enbridge has been sanctioning more pipeline expansion projects and discussing plans to add more capacity.
A draft environmental impact statement (DEIS) tied to a key water crossing along the Dakota Access Pipeline (DAPL) has finally been completed and made public, thereby ending another chapter in the long-running drama about the ultimate fate of DAPL, which is by far the largest crude oil pipeline out of the Bakken. While the DEIS doesn’t finish the story, the document provides hints about possible outcomes — and an opportunity to review just how important the 750-Mb/d pipeline really is to Bakken producers and shippers. In today’s RBN blog, we discuss the latest developments regarding DAPL and Bakken production.
When it finally came online in mid-2017, the Dakota Access Pipeline was a lifesaver for Bakken crude oil producers. For years, they had suffered from takeaway-capacity shortfalls that forced many shippers to rely on higher-cost crude-by-rail, sapping producer profits in the process. Then came DAPL, which provides straight-shot pipeline access to a key Midwest oil hub, and its sister pipe — the Energy Transfer Crude Oil Pipeline (ETCOP) — which takes crude from there to the Gulf Coast. Problem solved, right? Not exactly. Now, there’s at least an outside chance that a shutdown order is issued as soon as early April in connection with the ongoing federal district court process, with the timeline for a physical closure of the pipe still to be determined. A shutdown may last for only a few months but could potentially last much longer. Where does this uncertainty leave Bakken producers, many of whom have been hoping to benefit from the recent run-up in crude oil prices by ramping up their output this spring? Today, we discuss recent upstream and midstream developments in the U.S.’s second-largest shale/tight-oil play.
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.
A federal judge’s order that the 570-Mb/d Dakota Access Pipeline be taken out of service for a year or more starting August 5 has the potential to wreak more havoc for producers in the Bakken Shale at a time when they are still reeling from drastic, COVID-related production curtailments. While those production cuts have opened up at least some capacity on other takeaway pipelines out of western North Dakota and crude-by-rail terminals may be able to ramp up their operations, that may not be enough to make up for the loss of DAPL — still more well shut-ins may be required. Then there’s the matter of taking the 1,172-mile, 30-inch-diameter pipeline offline in only four weeks’ time — it involves much more than flipping a switch and may not even be possible within that time frame. Today, we consider the hurdles and implications of removing DAPL from service.
The Bakken Shale is being hit especially hard by production cuts this spring. Crude oil-focused producers large and small have been shutting in wells and putting well completions on hold, slashing daily crude output by more than one-sixth. The rig count is down by half in less than two months — to 26, the play’s lowest level since mid-2016 — and thousands of oilfield workers have been let go. All this is happening despite the facts that the Bakken’s four-county core has some of the best shale assets outside the Permian and that in 2017-19 the play was super-hot, with crude production increasing by 50%. That three-year growth spurt spurred the development of a number of new crude gathering systems, many of which now face a period of significant underutilization. Today, we discuss highlights from our new Drill Down report on oil production and supporting infrastructure in the U.S.’s #2 shale play.
The crude-oil price crash of the past couple of weeks is forcing producers in every U.S. shale play to reassess their drilling-and-completion plans for the balance of 2020. Still, while the pace of activity in the Permian, the Bakken and other major plays may slow somewhat in the coming months if crude prices stay low, the vast majority of the new wells that are drilled will need to be connected to crude gathering systems — ideally ones that offer producers and shippers a high degree of destination optionality. Today, we continue our series on crude-related assets in western North Dakota with a look at another leading midstreamer’s gathering system, and its link to the Dakota Access Pipeline and a nearby refinery.
It’s been a good couple of years for many of the midstream companies active in the Bakken. Crude oil-focused drilling and completion activity has rebounded from a mid-decade slump, flows through their crude and gas gathering systems have been rising, and gas processing constraints that had threatened continued production growth have been on the wane. All that has led Bakken producers to plan for further gains in output in 2020 –– though that may change as the economic effects of the coronavirus become clearer. In any case, production growth is only possible if there’s sufficient gathering infrastructure in place to handle it. Today, we continue our series on crude-related assets in western North Dakota with a look at two midstreamers that have experienced big gains in their Bakken crude-gathering volumes.
The Bakken was among the first plays to benefit big-time from the Shale Revolution, experiencing a 400%-plus increase in crude production in the first half of the 2010s. The play has had more than its share of challenges, however, including a serious lack of takeaway capacity that spurred the first rapid deployment of modern-day crude-by-rail, followed by a rig-count collapse and major production decline after the mid-decade crash in oil prices. But the Bakken has been roaring back. Crude output there now tops 1.5 MMb/d — some 250 Mb/d higher than its late-2014 peak — and producers have been planning for continued production growth in 2020, though many may be reassessing those plans in light of this week’s coronavirus-related price slide. In any case, production growth is only possible if there’s sufficient gathering infrastructure in place to handle it. Today, we continue our series on crude-related infrastructure in western North Dakota with a look at a leading Bakken midstreamer’s assets.
Crude oil production in the Bakken Shale, which slumped after the 2014-15 crash in oil prices, has increased by more than 50% in the past three years, and now tops 1.5 MMb/d. Just as important, producers in the core of the crude-focused play in western North Dakota have been ratcheting down their drilling-and-completion costs and making plans for continued production growth in 2020. Also, midstreamers are addressing a gas processing capacity shortfall that had threatened to slow drilling activity; in addition, some of them are developing crude oil takeaway capacity, including the planned Liberty Pipeline to the crude hub in Cushing, OK. Today, we begin a series on the Bakken’s expanding network of smaller-diameter crude pipelines and their role in further improving the shale play’s economics.
