By March 30, 2017 Read More →

Bakken output set to rise as Dakota Access Pipeline opens

Bakken output

Bakken output is expected to increase in 2017 to over 1,000,000 b/d. Statoil photo by Ole Jørgen Bratland.

Bakken output will get to refineries, Gulf Coast customers cheaper

North Dakota oil producers are expecting Bakken output to increase after the controversial Dakota Access Pipeline goes online next month.

Reuters reports the North Dakota to central Illinois pipeline is expected to save the energy industry $540 million in annual shipping fees.  These savings should help boost the revival of the Bakken region that was hit hard by falling oil prices in the past two years.

“We’re back to growth in the Bakken,” Hess Corp Chief Executive Officer John Hess told Reuters in a recent interview. The New York-based company has contracted with the Dakota Access Pipeline to transport about half its daily Bakken output.

Hess said he expects overall Bakken production to grow more than 10 percent in 2017.

In February, newly-elected President Donald Trump approved the $3.7 billion pipeline, reversing the Obama administration decision to block the DAPL last December.

Hess heralded the move, saying “We have to have a more pragmatic approach to infrastructure development in this country.”

DAPL operator Energy Transfer Partners LP has begun filling the line with crude and it could reach full operating capacity by late April, according to industry estimates.

Vicki Granado, spokeswoman for ETP told Reuters the Dakota Access Pipeline “will provide a safer, more environmentally responsible and more cost-effective transportation system to move crude across this country as opposed to truck or rail.”

DAPL will transport 500,000 b/d, over half of North Dakota’s daily output and will reduce costs by roughly $3 to $5 per barrel and cut down on producers’ reliance on rail-cars.

The pipeline will level the playing field for Bakken producers. “Economics for drilling in the Bakken will look better because of DAPL,” Rusty Braziel of RBN Energy consultants told Reuters in an interview.

Activity has increased in the Bakken, with the state’s rig count up 40 per cent since early February and analysts expect the count to increase by another 10 per cent.

Executives, investors and analysts say the new pipeline will be a key factor in decisions made by oil companies concerning production increases.

Hess is looking at tripling the number of rigs it operates in North Dakota in 2017 and expects to move 30 per cent of its existing Bakken output from rail to pipeline once DAPL opens.

Another Bakken producer, Oasis Petroleum, says it may see a more than 30 per cent increase in activity this year due.  Company CEO Tommy Nusz told Reuters DAPL “is definitely going to give us more options to get our product to market.”

Two of the states largest producers Whiting Petroleum and Continental Resources do not have a contract for space on the Dakota Access Pipeline.  The two companies, though, see DAPL as a plus for other Bakken producers who can rely less on rail cars and take advantage of space freed up on existing pipelines after DAPL goes online.

Both Whiting and Continental are expecting their output to increase by over 20 per cent in 2017.

Opponents to the pipeline say the will continue to oppose the DAPL as well as oil production across North Dakota.


“Just because oil flow is pending does not mean that it cannot be stopped by court order, and we have a strong, ongoing case in front of the courts,” David Archambault II, chairman of North Dakota’s Standing Rock Sioux tribe, which lives adjacent to the line told Reuters.



In the past year, oil production in North Dakota fell by 13 per cent to about 980,000 b/d due to low crude prices.  This year, analysts say statewide oil production should rise above 1 million b/d.




Posted in: News

Comments are closed.