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Linn Energy, LLC (LINE) Message Board

  • rlp2451 rlp2451 Apr 5, 2013 6:52 PM Flag

    WTI/Bakken Diiferential

    From "This Week in Petroleum" , EIA:

    West Texas Intermediate prices are determined at Cushing, Oklahoma; Bakken prices are those at Clearbrook, Minnesota, where the North Dakota pipeline network joins Enbridge's pipeline running southeast from western Canada. Because of the costs of transporting Bakken crude to Clearbrook, including the pipeline tariff, the price for Bakken at the wellhead will be less than the delivered price at Clearbrook. (oh no, say it isn't so!)

    The strong growth in Bakken production has frequently outpaced expansion of the local transportation infrastructure, leading to discounts for Bakken crude compared to benchmark WTI.

    Pipeline capacity out of the region, which is also used to accommodate increased production of Canadian crude flowing through the region, was estimated at only 395,000 bbl/d in 2012.

    Limited pipeline capacity has forced shippers of Bakken crude to use alternative transportation, such as railroads. According to the North Dakota Pipeline Authority, loading capacity at North Dakota rail terminals increased by 660,000 bbl/d between 2007 and the end of 2012, with an additional 355,000 bbl/d of capacity expected to come on line by the end of 2014. (No mention of additional pipeline capacity in 2014.)

    Although transportation of crude oil by rail is generally more expensive than shipping by pipeline, rail-loading capacity has proven cheaper and quicker to build. In addition, the logistical flexibility of rail has enabled Bakken crude to reach refining areas not typically served by pipeline from the Bakken. Historically, crude oil production from the Northern Plains has been discounted against midcontinent crudes to account for the added costs of moving these crudes by pipeline to areas such as Cushing, Oklahoma, and the Gulf Coast.

    (Edited for space limitations. Comments in parentheses are mine.)

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    • ....so what happened to the Bakken-WTI spread?

      Oh....just LEFT THAT PART OUT since it is not the story you wanted to tell.....again?

      "Bakken crude sold at a $25-per-barrel discount to WTI in early 2012 and rose to a $5-per-barrel premium last September, before again being discounted below WTI this winter."

      LOL

      Some parts you left out from that report......

      "The differential between West Texas Intermediate (WTI) and North Dakota's Bakken crudes continues to fluctuate, reflecting both production growth and changes in oil transportation capacity. Bakken crude sold at a $25-per-barrel discount to WTI in early 2012 and rose to a $5-per-barrel premium last September, before again being discounted below WTI this winter. So far this year, the gap between Bakken and WTI prices has narrowed, and once again, the Bakken price has risen above the WTI price, albeit modestly (Figure 1).

      For West Coast refineries, cost-competitive access to Bakken crude would allow the Bakken oil to displace more-expensive imports there, as well. West Coast imports, which come primarily from Saudi Arabia, Ecuador, and Iraq, have remained flat since 2006; however, Anacortes, Washington, began receiving unit-train shipments of Bakken in late 2012, potentially signaling new competition for West Coast oil imports.

      As Bakken rail shipments reach the East and West coasts, pricing for Bakken crude oil is evolving. The ability to economically reach refineries on the East and West coasts expands the market for Bakken beyond the traditional Midwest and Gulf Coast refineries, which have experienced a glut of midcontinent crudes in recent years. By moving east and west, Bakken escapes the infrastructure constraints that have significantly affected the price of WTI."

    • So What?

      KOG sells their oil at the well.
      NTI buys less costly Canadian & Bakken crude....

      The OIL pipelines were all discussed and discussed and discussed.....because while the data and relevant info IS POSTED AT the ND Pipeline Authority webpage(s)....you kept insisting that the state of North Dakota has it all wrong and you are correct.....and to that I say that maybe you should go read over there and learn something for a change....OH, but we all see that you are back to you usual cut & past-jobs instead.

      Remember all this?

      Pipeline takeaway for OIL in Bbls/day for The Williston Basin
      2008......272,000
      2009......286,000
      2010......337,500
      2011......413,000
      2012.....463,000
      2013.....658,000
      2014.....918,000
      2015.....1,018,000
      2016.....1,243,000

      Railroad takeaway for OIL in Bbls/day for The Williston Basin

      2008.....30,000
      2009.....95,000
      2010....115,000
      2011.....275,000
      2012.....730,000
      2013.....880,000
      2014.....880,000
      2015.....880,000
      2016.....880,000

      The names, OIL quantities & the OIL pipeline takeaway capacities:

      Butte Pipeline expanded up to 160,000 Bbls/day in 2012
      Butte Loop Pipeline expanding to 100,000 Bbls/day by 2014
      Tesoro Refinery expanded to 68,000Bbls/day in July 2012
      Enbridge Mainline North Dakota expanded to 210,000 Bbls/day in 2012
      Enbridge Bakken Expansion Program expanding to 145,000 Bbls/day in Q1, 2013
      Plains Bakken North expanding to 75,000 Bbls/day in 2013
      High Prarie Pipeline expanding to 150,000 Bbls/day in 2014
      Enbridge Sandpiper expanding to 225,000 Bbls/day in Q1, 2016

      How fast you try to forget what is going on in North Dakota.

 
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