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Linn Energy, LLC (LINE) Message Board

  • rlp2451 rlp2451 Oct 30, 2012 3:38 PM Flag

    Could New Pipeline Help LINE?

    Does Linn currently have the capacity needed to ship products from Salt Creek?

    30 October 2012
    A natural gas company wants to build a 1,300-mile pipeline to carry crude oil from North Dakota through easternmost Wyoming on its way to the nation’s biggest storage terminal in central Oklahoma.

    Tulsa, Okla.-based Oneok Partners LP said the proposed Bakken Crude Express Pipeline would cost between $1.5 billion and $1.8 billion and would have the capacity to move 200,000 barrels of crude daily from the heart of North Dakota’s rich oil patch to the hub in Cushing, Okla.

    “As producers continue to aggressively develop crude oil from wells in the Bakken Shale, more crude oil pipeline takeaway capacity will be required,” Oneok Partners President Terry Spencer said in a media release. “This proposed pipeline will provide producers with efficient and reliable transportation of their product directly to one of the largest crude oil market hubs in the U.S.”

    Oneok spokesman Brad Borror said his company is negotiating commitments with oil suppliers that could put it on track to begin construction next year and complete a pipeline by 2015.

    Pipe threads eastern Wyo

    Oneok says the pipeline should closely follow the company’s earlier-announced 500-mile Bakken Pipeline, a $430 million to $500 million line to move Bakken play natural gas liquids — ethane, propane, butane and natural gasoline — from a gathering point in Montana through Wyoming and into the Overland Pass Pipeline in Colorado.

    Oneok project maps show the natural gas liquids pipeline entering Wyoming at its far northeastern corner before passing just west of Newcastle, east of Lusk and arcing around Torrington before heading due south into Colorado to meet the Overland Pass line.

    An Oneok map for its newly announced oil pipeline shows a track that mirrors its natural gas liquids pipeline.

    Eighty percent of the proposed oil pipeline’s path would follow Oneok’s existing or planned natural gas pipeline routes, Borror said.

    “We are currently working with producers of natural gas and natural gas liquids, so this would allow us to be a full-service provider,” Borror said.

    Construction on the natural gas liquids line is expected to begin next month and finish early next year, according to Oneok.

    Boon to Wyo producers

    The new pipeline isn’t only good for Bakken producers, who are struggling with ways to ship oil from North Dakota.

    Wyoming oil producers have faced pipeline jams with crude from the Bakken and Canada, tamping down prices for the product from the Rocky Mountain region, said Brian Jeffries, Wyoming Pipeline Authority executive director.

    The situation mirrors the former issues that plagued Wyoming natural gas producers, who had to contend with limited pipeline capacity to transport their product to consumers, which kept prices low. New, large natural gas pipelines have come on-line and solved the problem.

    “Principally, the Bakken growth has filled up the pipelines in this area, so oil sells for a discount compared to the oil in Cushing,” Jeffries said.

    As new pipelines come on-line, including Oneok’s Bakken Crude Express and a few lines between Cushing and the Gulf Coast, oil from Wyoming and other Rockies producers won’t be as steeply discounted, Jeffries said. That’ll likely spur investment and more production, and more tax revenue for the state, he said.

    “You start to unlock the whole bottleneck all the way from Wyoming to the Gulf Coast,” he said.

    Oil gluts North Dakota

    Shippers increasingly are using trains to get crude out of North Dakota, with rail shipments accounting for about a quarter of the more than 546,000 barrels produced daily in the state, said Justin Kringstad, director of the North Dakota Pipeline Authority.

    North Dakota is the nation’s third-largest oil producer and is expected to trail only Texas in crude output within the next year. The state’s burgeoning oil production is out pacing the ability to efficiently move the product to market, causing drillers to take deep price cuts.

    Oneok’s plan brings to six the number of pipeline projects proposed to help ship crude out of the Bakken shale and Three Forks-Sanish oil reservoirs in western North Dakota, Kringstad said. But he said commitments from suppliers will determine which projects become reality.

    Kringstad called Oneok’s proposal “very substantial” but said the market will determine if any of the proposed pipelines are built.

    “Ultimately, it will be up to the industry to decide which of the various projects it wants to support,” Kringstad said.

    Oneok also has nearly $2 billion in projects planned to ship and process natural gas and natural gas liquids from western North Dakota to Midwest and Rocky Mountain markets, Borror said.

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    • Have you ever seen this helpful information direct from the State website...(like maybe over at the KOG board).....
      ..... but you never seemed to actually read it, did you?

      as of 10/19/2012

      Director’s Cut
      Lynn Helms
      NDIC Department of Mineral Resources

      Jul Oil 20,963,713 barrels = 676,249 barrels/day
      Aug Oil 21,735,166 barrels = 701,134 barrels/day (preliminary)(NEW all-time high)

      Jul Gas 22,295,369 MCF = 719,205 MCF/day
      Aug Gas 23,616,598 MCF = 761,826 MCF/day (preliminary)(NEW all-time high)

      Jul Producing Wells = 7,467
      Aug Producing Wells = 7,701 (preliminary)(NEW all-time high)

      Jul Permitting: 183 drilling and 0 seismic
      Aug Permitting: 261 drilling and 1 seismic
      Sep Permitting: 273 drilling and 0 seismic (NEW all-time high)

      Jul Sweet Crude Price = $71.13/barrel
      Aug Sweet Crude Price = $80.65/barrel
      Sep Sweet Crude Price = $84.98/barrel

      Today Sweet Crude Price = $89.50/barrel ND (all-time high was $136.29 July 3, 2008

      So when you post an article that says 546,000 barrels/day are being shipped from North Dakota and just yesterday you were complaining that this information above was posted too many times for your liking......

      ......well if you read it even once then you would know that there was alot more oil being produced than that article says and all of it now has takeaway capacity....

      ....... and it all is being transported out without any problem.....this was ND oil production for back in August..
      Aug Oil 21,735,166 barrels = 701,134 barrels/day (preliminary)(NEW all-time high)


      So, how do we know that?

      because the North Dakota State website (which it seems that you did eventually find) says so:

      "Over 95% of drilling still targets the Bakken and Three Forks formations.

      Crude oil take away via pipeline is now 43% of daily production, but transportation by rail at 46% and truck at 2% plus Tesoro refining 9% are adequate to keep up with near term production projections."

      This comment above on takeaway capacity in ND being sufficient is from very recently, from October 19, 2012......and,

      ..... it is posted at the ND state website......go look if you like.

      How old is that article you posted,
      ..... and how old is the data, because it has been a while since ND produced only 546,000 barrels/day?

      Sentiment: Strong Buy

9.16+0.21(+2.35%)Jul 2 4:00 PMEDT