Shale Daily / NGI All News Access

North Dakota Oil Doubles, Moves Nationwide

Based on the state's latest statistics as of the end of February, North Dakota's oil production has doubled in the past two years, and with the help of increased rail transportation it is being marketed nationwide.

While production has doubled since 2010 (262,000 b/d, compared to 558,000 b/d at the end of February), the price has increased more than $15/bbl during the same period, hitting about $83/bbl in February. Relative to other domestic and global prices, the oil from North Dakota's rich Bakken and Three Forks formations is selling at about 25% less than West Texas Intermediate (WTI), which continues as the U.S. benchmark for oil prices.

With the Cushing, OK, bottleneck still unresolved and North Dakota's rapid Bakken development outpacing takeaway infrastructure, the amount of crude being shipped by rail has ballooned in two years to 25%, according to Justin Kringstad, director of the North Dakota Pipeline Authority. Kringstad verified that crude from the state is now reaching all the coasts: West, East and the Gulf of Mexico.

Two years ago only a small percentage of North Dakota oil was moving by rail, Kringstad said. The state is continuing on the record-setting pace established last year (see Shale Daily, March 22; Feb. 16). Since March the state now ranks third nationally in average daily oil production, surpassing California and following only Texas and Alaska (see Shale Daily, March 14).

According to Kringstad, the state's producing wells numbered 6,726 in February, nearly 2,100 more than two years ago and 1,400 more than last year at the same time.

The oil shipments have in recent weeks branched out to Washington and New York states through the use of rail, and in the case of New York, also by barge to Pennsylvania. Kringstad also confirmed that in recent weeks supplies are also going to Oklahoma and Texas.

With North Dakota's lower price advantage, refineries on the East and West coasts are lapping up the state's crude, displacing foreign supplies that are shipped in ocean-going tankers.

Behind the Eagle Ford Shale and the Niobrara-DJ Basin, the Bakken/Sanish/Three Forks play has been the third fastest growing unconventional target in the United States over the last year. According to NGI's Shale Daily Unconventional Rig Count for the week ending April 13, there are currently 222 oil and gas rigs operating in the play, which is up 28% from the 174 rigs that were operating one year ago.

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