Oil production from the Bakken Shale in eastern Montana, still relatively small compared to North Dakota's record-setting output, has been steadily increasing, according to the North Dakota Pipeline Authority (NDPA).

NDPA Director Justin Kringstad in a recent update on October production data said he continues to see an upward trend in oil production from eastern Montana. The state had four drilling rigs working in December, versus zero a few months ago, he said. More activity is underway in the far western part of North Dakota, near the Montana border.

The Brent to West Texas Intermediate spread grew to $10/bbl in October and in December the spread has been $9-10 he said, “certainly enough to make it attractive for shipping companies to put that barrel of oil on a railcar, and try to get it to the East or West Coasts, and now even to the Gulf Coast.”

Montana oil output for the first nine months of the year grew from 50,000 b/d to a peak of nearly 56,000 b/d, Kringstad said. That compares to North Dakota's Bakken, which averaged 1.39 million b/d in October alone.

The West Coast is the main destination for Bakken rail shipments, while the East Coast is close behind. Only a few shipments are headed to the Gulf Coast today, but Kringstad thinks that may change as “shippers try to bypass some of the traditional congestion points in the pipeline network.”

In October, 71% of the Bakken production shipped by pipeline with another 18% going via rail. The rest of the production was either refined (6%) or sent by truck/rail to Canada (5%).