Infrastructure / Bakken Shale / Shale Daily / NGI The Weekly Gas Market Report / Rockies/Other / NGI All News Access

Bakken NatGas, Pipelines See Boost From Low Prices

The latest oil/natural gas statistics compiled in North Dakota reveal some hidden beneficiaries of the low commodity price environment in terms of both natural gas capture and the preference of oil pipeline transportation out of the Bakken, state energy officials indicated last Wednesday.

In the most recent complete monthly statistics for April, Lynn Helms, director of the state Department of Mineral Resources, found the most positive development among otherwise "bad and ugly" indicators in the fact that gas capture statewide reached 91%, and for the Bakken alone up to 92%, far ahead of the state goal of 80% outlined two years ago when North Dakota established anti-flaring goals (see Shale DailyJuly 3, 2014).

"Statistically, we are well above the current goals and regulations," Helms said. "We're really making progress on capturing and marketing natural gas even in the face of some pretty low prices, and a 20-to-1 ratio between oil and natural gas."

In responding to questions from news media during a webinar regarding possible impacts from federal methane emission reduction requirements, Helms said the state has not completed its analysis, but on a preliminary basis, the state's comments to federal agencies have focused on concerns about its ability to advance in meeting future gas capture goals. He acknowledged there are potential jurisdictional conflicts between state rules and proposed federal regulations on methane.

Generally, the significant slowdown in drilling from the two years of low prices has helped gas capture with operators being able to catch up on gathering infrastructure and well connections, Helms said in response to another media question.

Justin Kringstad, director of the North Dakota Pipeline Authority, offered the latest statistics underscoring the continuing shift to more pipeline transport of Bakken sweet crude oil and away from rail shipments. For April, rail shipments of oil dropped to 33%, or below 400,000 b/d, Kringstad reported. Some 58% of the volumes, more than 550,000 b/d, were shipped in pipelines.

The price spread between WTI and Brent has continued to stay narrow -- about a $1 difference -- which is another inducement for more pipeline oil transportation, Kringstad noted. Since late last year, the majority of Bakken crude has traveled to market in pipelines (see Shale DailyJan. 19). "Nothing is developing -- rising production or market spreads -- that indicates there will be a shift back to rail," he said.

"In recent times, we have not had any new major pipeline expansions, so it is strictly market conditions driving more barrels to the pipeline destinations as opposed to coastal rail destinations," Kringstad said. "There has been a very significant downward trend in Bakken crude-by-rail shipments over the last six months."

Remaining rail-shipped oil goes primarily to the East Coast, followed by shipments to the West Coast, he said. The East and West Coasts continue to be the highest priced markets, according to Kringstad's statistics.

"All the indicators are that we are going to continue to see pipelines be the preferred route to transport barrels out of the region."

ISSN © 2577-9877 | ISSN © 1532-1266 | ISSN © 2158-8023

Recent Articles by Richard Nemec

Comments powered by Disqus