gravity

The Energy Information Administration (EIA) recently raised a few eyebrows across the energy industry with a report that producers in three key shale states — including Texas, the nation’s #1 oil producer — seem to be extracting larger amounts of “heavier” crude oil. Of course, the oil is only heavier relative to the light and superlight grades that have been produced in copious amounts since the dawn of the Shale Revolution. But these denser, lower-API volumes have recently helped drive growth in total crude output. In today’s RBN blog, we unpack what the EIA discussed in its writeup, explore some of the possible drivers behind the apparently heavier oil production, and discuss what it might mean for the domestic market. 

Lots of people talk about the price of West Texas Intermediate crude oil at Cushing, OK.  But few producers and royalty owners receive that price.  In today’s blog we delve into the secret black art of crude oil pricing, focusing on the Bakken.  In Part I of our tutorial on crude oil pricing we will cover the mysteries of crude oil “postings” – which is one of the two major mechanisms that determine the prices paid for crude being produced from the oil rich Bakken shale play.  (The other mechanism is spot purchases at major trading hubs, and will be the subject of a later installment.)  This blog will be the first in a series designed to uncover how crude is priced, what the transportation costs are and how refiners determine the profitability of processing one crude versus another.