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Linn Energy, LLC (LINE) Message Board

  • rlp2451 rlp2451 Jun 21, 2013 3:48 PM Flag

    OT: ND Pipeline Shipments Slip Dramatically in Past Year

    June 21 -BISMARCK, N.D. — The percentage of North Dakota oil shipped by pipelines has dramatically slipped in the past year as producers have turned to trains to reach faraway U.S. refineries where premium prices are fetched based on foreign crude prices.

    Rail shipments accounted for about three-fourths of the record 794,000 barrels of crude produced daily in April, said Justin Kringstad, director of the North Dakota Pipeline Authority. Trains accounted for only 39 percent of the North Dakota’s oil shipments for the same month a year ago, data show.

    “Rail has not only been able to meet the needs of producers, it has exceeded the needs by providing that extra value to North Dakota crude oil,” Kringstad said.

    Pipeline shipments of sweet crude from the state’s rich Bakken and Three Forks formations slid from 21 percent of total production in March to 17 percent in April, Kringstad said, citing the most recent data available.

    North Dakota has become the U.S.’s second-biggest oil producer behind Texas, but its infrastructure wasn’t capable of keeping up with the rapid growth of the oil industry. The problems that North Dakota producers have had in getting their product to market has forced them to sell for up to 30 percent less than the benchmark price for light sweet crude that’s set in Cushing, Okla., the major crude hub where most U.S. shipments are sent.

    Billions of dollars in rail and pipeline facilities have been built over the past few years, bumping North Dakota’s current rail shipping capacity to about 800,000 barrels daily and about 583,000 barrels by pipeline.

    Kringstad said a barrel of West Texas Intermediate, the light sweet crude North Dakota produces, has been more than $20 cheaper than a premium Brent barrel over the past year, but the gap recently narrowed to less than half of that.

    A barrel shipped by rail typically costs $2 to $3 more than if it were shipped by pipeline, Kringstad said.

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