Wind Farm Proposed for Barnes County

An application to build a 300-megawatt wind farm near Valley City in Barnes County has been submitted to the North Dakota Public Service Commission, according to an article in today's Bismarck Tribune. According to the article, the project was proposed by Colorado-based Glacier Ridge Wind Farm LLC, a subsidiary of Renewable Energy Systems Americas Inc. of England. The company anticipates construction on the facility to begin in November and be completed by late 2019.  Read more

New Wind Farms Approved

The North Dakota Public Service Commission today approved a 100-megawatt wind farm to be constructed northwest of Bismarck. The project will consist of 48 turbines located on 14,000 acres of land in Oliver and Morton counties. Last week, the PSC approved an 87-turbine wind project for Stark County in southwestern North Dakota. Read more

Helms Updates Legislators on Bakken Slowdown

In a meeting today with state legislators, North Dakota Department of Mineral Resources Director Lynn Helms said the current slowdown in drilling activity in western North Dakota will significantly affect the state's revenue forecast over the next two years. In addition, Helms predicted the slowdown will make it difficult for the state to continue reducing natural gas flaring. Helms noted that North Dakota's rig count stood at 74, down from 191 in December, but added that the rate of permit applications continues to be brisk. Read more

EIA Updates State Mining Trends

Source: U.S. Commerce Department, Bureau of Economic Analysis (BEA), Regional Economic Accounts
Note: BEA uses the value-added approach to estimate industrial contribution to GDP by state, or gross state product, presenting industrial value-added output by state based on the North American Industry Classifications System (NAICS).Mining comprises establishments that extract naturally occurring mineral solids, such as coal and ores, crude petroleum, and natural gas. The data are converted to real (2009$) GDP by state by applying national chain-weighted price deflators.

---

At the national level, establishments that extract crude oil and natural gas as well as naturally occurring mineral solids, such as coal and ores, collectively referred to as the mining sector in economic data, accounted for about 2% of the U.S. economy last year. In some states, though, the mining sector accounts for a much larger share of the economy. Of the six states where mining comprised more than 10% of the state's economy in 2013, mining growth resulted in five of those states having higher economic growth than the national average.

• Wyoming. With crude oil and natural gas production from the Niobrara formation and coal mining from the Powder River Basin, Wyoming derives a larger share of its economic output from mining than any other state. In 2013, Wyoming's economic output from mining grew 18% between 2012 and 2013.
• Alaska. Alaska has the second-largest share of its economy tied to mining activity. An 8% decrease in mining activity in 2013, reflecting a drop in oil production from the North Slope, contributed to the decline of Alaska's total GDP by 2.5% in 2013, the largest decline in the nation.
• West Virginia. Most of West Virginia's mining activity is from coal mining, but natural gas production from the Marcellus shale in West Virginia has increased in recent years. The sector grew from 11% of total economic activity in 2003 to 17% in 2013.
• North Dakota. In percentage terms, North Dakota has experienced more change in its economic makeup from mining activity than any other state, going from 2% of its economy in 2003 to 14% in 2013. North Dakota's crude oil production surpassed 1 million barrels per day in average monthly oil productionearlier this year, because of production in the Bakken region. Associated effects from Bakken development, such as growth in construction, real estate rental and leasing, and accommodation and food services, also increased economic output. Growth in the mining sector has helped North Dakota achieve the lowest unemployment rate in the nation at 2.7% as of June.
• Oklahoma. Oklahoma has significant oil and natural gas production, ranking fifth nationally in the volume of crude oil production and fourth in natural gas production. The state saw 19% growth in mining activity, up from its ten-year average of 7%. Oklahoma’s significant refining and transportation activity is not included in the mining sector data.
• Texas. In absolute terms, mining activity in Texas in 2013 was more than seven times greater than the next largest state, Oklahoma. But compared to the states discussed above, Texas’s economy is much larger, so mining only accounts for about 11% of its economy. Much of the recent growth in mining has come from rapidly growing oil and gas production in the Eagle Ford formation and Permian Basin.

Source: U.S. Commerce Department, Bureau of Economic Analysis (BEA), Regional Economic Accounts

---

Source: EIA

EIA Updates Bakken Production Trends

Source: U.S. Energy Information Administration, Petroleum Supply Monthly and Drilling Productivity Report
Note: The Bakken counties total exceeds the North Dakota state total because the Bakken counties include crude oil production from some counties in eastern Montana. North Dakota production is for the entire state, not just counties in the Bakken Region.

---

North Dakota crude oil production surpassed 1.0 million barrels per day (bbl/d) in April and May (the latest data available). This record is the result of increasing crude oil production from the Williston Basin's Bakken and Three Forks formations in North Dakota and eastern Montana.

Although Bakken oil production initially began in the 1950s at Antelope Field in North Dakota, large-scale production growth did not begin until after the discovery of the Parshall Field in 2007. Since then, advances in drilling methods and technology, a better understanding of the geology of the Bakken, higher crude oil prices, and the formation's large size and number of wells all have contributed to higher production and to the potential for continued future growth.

As more wells are drilled in the Bakken, the base resource becomes better defined. Because the Bakken has a relatively low thickness (not exceeding 250 feet) and low permeability, better information on the location of available resources can quickly translate into an increase in crude oil production volumes.

Defining the resource in any formation is critical in forecasting the growth and sustainability of its oil and natural gas production. Factors such as the geologic extent, depth, thickness, and porosity of a formation can inform the estimated ultimate recovery (EUR) rate of wells that are drilled in a formation. EIA uses geologic data to better understand individual well performances and the expected EUR in the Marcellus Shale, and plans to expand these efforts over time to include other formations throughout the United States, including the Bakken.

Source: U.S. Energy Information Administration
Note: Click to enlarge.

---

EIA uses well data to create maps showing the extent and structure of the productive and prospective regions of the Bakken. These maps help to visualize the depth and relative thickness of the Bakken formation. In addition, depth maps define the region where the resource is within optimal drilling range. Three-dimensional thickness maps can be used to determine rough estimates of resources in this region, as well as structural features such as faults and folds.

Source: EIA

ONEOK Announces Bakken Expansion Plans

ONEOK Partners, L.P. today announced plans to invest approximately $605 million to $785 million between now and the end of the third quarter 2016 to:  

• Build a new 200-million cubic feet per day (MMcf/d) natural gas processing facility – the Demicks Lake plant – and related infrastructure in northeast McKenzie County, North Dakota, which will process natural gas produced from the Bakken Shale in the Williston Basin;
• Construct additional natural gas compression to take advantage of additional natural gas processing capacity at the partnership's existing and planned Garden Creek and Stateline natural gas processing plants in the Williston Basin by a total of 100 MMcf/d; and
• Build approximately 12 miles of natural gas liquids (NGL) gathering pipeline from the Demicks Lake plant to the partnership's existing Bakken NGL pipeline.

"The Demicks Lake plant and additional natural gas compression will increase our natural gas processing capacity in areas that continue to be developed aggressively by crude-oil and natural gas producers," said Terry K. Spencer, president and chief executive officer of ONEOK Partners.  "The additional 300 MMcf/d in the Williston Basin will increase our natural gas processing capacity to approximately 1.1 billion cubic feet per day (Bcf/d) in the region. Pending board approval, we expect to announce additional Williston Basin natural gas processing capacity by the end of this year."

In addition, the Garden Creek III natural gas processing plant, originally scheduled for completion in the first quarter 2015, is now ahead of schedule and slated for completion in the fourth quarter 2014.

Source: ONEOK Partners

NDIC Sends Fracking Comments to EPA

From the Bismarck Tribune...

State officials agreed Tuesday to forward comments to the U.S. Environmental Protection Agency saying that the current reporting system for disclosing chemicals used in hydraulic fracturing is adequate. more

Full text of comments available here

U.S. Refineries Running at Record Levels

Source: U.S. Energy Information Administration, Weekly Petroleum Status Report

---

U.S. refineries have been processing record volumes of oil recently. Refinery inputs hit a record-high 16.8 million barrels per day (bbl/d) in each of the past two weeks, exceeding the previous record from summer 2005. Refineries in the Midwest and Gulf Coast in particular pushed the total U.S. input volume upward, as these refiners' access to lower-cost crude oil, expansions of refining capacity, and increases in both domestic demand and exports contributed to higher refinery runs.

As discussed in This Week in Petroleum, refinery gross inputs in the Midwest have been higher than the five-year range since late April. Typically, Midwest drivers use more motor gasoline in the summer, and some of that has come from the Gulf Coast. However, recent and planned changes to pipeline infrastructure have altered both the type of products in the pipelines and direction of flow. These changes increase the incentive for Midwest refiners to boost their own gasoline production.

The Midwest's record-high runs of 3.8 million bbl/d for the week ending July 11 pushed the region's refinery utilization to 100.3%, the first time any of the Petroleum Administration for Defense Districts (PADDs) has exceeded 100% since EIA began publishing weekly PADD-level utilization in June 2010. But this number says as much about the metric used as the feat itself. Refinery utilization is calculated based on calendar-day atmospheric crude distillation unit (ACDU) capacity, which takes into account usual operating conditions, including both planned and unplanned outages. Under ideal conditions, when outages are low, refiners can produce at levels above their calendar-day ACDU capacity.

Realization of long-anticipated capacity expansions in the Gulf Coast region has also pushed their regional refinery runs to record levels. Gulf Coast gross inputs rose to 8.5 million bbl/d for the week ending June 27 and reached 8.7 million bbl/d for each of the following two weeks. The United States remains an increasingly active participant in the global petroleum products trade. The Gulf Coast region's competitive advantage, which is based on upgrading capacity of refineries, relatively lower costs of inputs and fuel, and access to growing markets, keeps utilization rates high.

Source: EIA

Bakken Rail Transport Update

Most recent update - 8/6/2014

8/6/2014  State officials decided Wednesday a public hearing is in order to determine if any new regulations may be necessary in ensuring the safety of crude oil shipped by rail from North Dakota. more

7/28/2014 Canada quietly issued new details on rail safety regulation last week that included specifications for the next generation of tank cars that are tougher than some of the options proposed by the U.S. Department of Transportation on Wednesday. more

7/27/2014 Railroad documents released by the state Department of Public Safety show about 50 trains carrying crude oil from North Dakota are passing through Minnesota each week, most traveling along the Burlington Northern Sante Fe Railway line between Moorhead and the Twin Cities. more

7/26/2014  Railroad crews have reopened tracks where an oil train derailed early Thursday in Seattle, but work continues on three damaged tanker cars. more

7/23/2014 New proposed U.S. Department of Transportation regulations call for the testing of Bakken crude and better rail cars to ship it in. The DOT opened proposed oil-by-rail rules up for public comment Wednesday. The new rules are intended to improve the safe transportation of large quantities of flammable materials by rail. more

7/15/2014 Two environmental groups are asking the U.S. Department of Transportation to immediately ban shipments of volatile crude oil in older railroad tank cars, citing recent explosive oil train wrecks and the department's own findings that those accidents pose an "imminent hazard." more

7/14/2014 A string of fiery train derailments across the country has triggered a high-stakes but behind-the-scenes campaign to shape how the government responds to calls for tighter safety rules. more

7/1/2014 Union Pacific railroad is no longer sending cars filled with especially volatile crude oil through the city of St. Louis, Fire Chief Dennis Jenkerson told a group of concerned residents at a community meeting at the Carondelet Park Recreation Complex. more

6/28/2014 A North Dakota regulator says the state should employ its own railroad safety inspectors to help the federal government monitor crude oil shipments coming from the state's Bakken oil play. more

6/25/2014 Disclosures from railroads about volatile oil shipments from the Northern Plains show dozens of the trains passing weekly through Illinois and the Midwest and up to 19 a week reaching Washington state on the West Coast. more

6/18/2014 Speakers in Spokane, Wash. told a state Senate committee Tuesday that they oppose the rapid increase in rail cars carrying crude oil from the Bakken fields of North Dakota and Montana through the state. more

6/17/2014  As politicians debate the dangers of a massive increase in oil carried by rail in North America, railroads and energy producers are considering the same for natural gas. more

6/5/2014 U.S. railroads forced to turn over details of their volatile crude oil shipments are asking states to sign agreements not to disclose the information. But some states are refusing, saying Thursday that the information shouldn't be kept from the public. more

6/3/2014 Oil industry studies concluding that Bakken crude oil is safe to move by rail under existing standards may underestimate the dangers of the fuel and should not be the last word, U.S. lawmakers and industry officials said on Monday. more

5/28/2014 Residents and officials in towns along North America's new oil-by-rail corridors reportedly want to limit or halt the traffic, fearful that existing precautions will not prevent deadly blasts, air and waterway pollution, or nuisances including nasty odors. more

5/20/2014  In a presentation made at the Williston Basin Petroleum Conference in Bismarck today the central region director for the federal Pipeline and Hazardous Materials Safety Administration said improved communication and compliance with federal regulations for transporting crude oil are necessary for the oil to be continued to be moved safely. more

5/20/2014 Oil industry representatives are pushing back against tougher rules for rail cars carrying crude despite a string of fiery accidents and insisting that oil shipped by train from the Northern Plains is no more dangerous than some other cargoes. more

5/15/2014 America’s smaller railroads lack the capability to offer safety training in the shipment of crude oil and ethanol, and two top Senate appropriators asked federal regulators to fund those efforts, according to a report published today. more

Read more here: http://www.mcclatchydc.com/2014/05/15/227545/senators-push-to-fund-crude-oil.html#storylink=cpy

5/15/2014 A study funded by the American Fuel & Petrochemical Manufacturers, the trade group for the country's refiners, concluded that crude oil shipped from the Bakken play is being handled properly. more

5/13/2014 Regulators reportedly are considering ways to make Bakken crude safer to ship including a requirement that natural gas liquids be stripped from the crude prior to transporting it. more

5/9/2014 The main railroad moving crude oil out of the rich Bakken formation in North Dakota and Montana said a new federal emergency order on rail shipments will not affect shipments. more

5/7/2014 U.S. companies moving crude oil via rail must tell state officials when a cargo is moving across their regions, the U.S. Transportation Secretary said at a Senate Commerce Committee hearing today. more 

4/25/2014 The head of the U.S. Department of Transportation said yesterday during his visit to Casselton in eastern North Dakota that his office plans next week to outline options for enhancing tank car standards. Casselton was the site of a December oil train derailment. more

4/23/2014 Efforts to improve rail safety reportedly are being hampered by a lack of cooperation among the key players. The oil industry and the rail industry are refusing to share data about the characteristics of oil being shipped and the basis for recommendations for safer tanker cars, respectively, according to a report out today. more

4/23/2014 Canada's Minister of Transport today announced actions to address the Transportation Safety Board of Canada's initial recommendations regarding the ongoing investigation into the Lac-Mégantic train derailment. more

4/23/2014 The National Transportation Safety Board (NTSB) concluded its forum titled, "Rail Safety: Transportation of Crude Oil and Ethanol" today. The two-day event addressed rail safety, specific to the transportation of crude oil and ethanol  more

According to a new EnergyWire report, rail shippers are not required to submit emergency response plans to the Federal Railroad Administration for monitoring and review unless they use tank cars with a capacity of 42,000 gallons or more. The report points out there currently are no tankers of that size hauling crude and that just five such cars exist nationwide. Shippers using smaller tankers are required to maintain basic emergency response plans in their own files, but, according to the report, the government does not review or monitor those plans. more

The U.S. Transportation Secretary Anthony Foxx plans to meet this week with Casselton officials to discuss the oil train derailment that occurred near the eastern North Dakota community last December.  Foxx is slated to meet with local leaders on Thursday and provide an update on efforts to improve rail safety. more

A report in the StarTribune highlights the possible effect of recent legislation enacted in Canada that imposes surcharges on rail shippers using older tank cars to transport crude oil. Official notes from a March 19 meeting with the administrator and top officials of the U.S. Transportation Department’s Pipeline and Hazardous Materials Safety Administration suggest that some in the rail industry believe the Canadian policy will lead Canadian shippers to purchase newer, reinforced tankers and send the older cars to the U.S. where similar legislation governing tank cars has not yet been enacted. more

Source: U.S. Energy Information Administration


Crude Oil Export Options
Source: North Dakota Pipeline Authority







Source: North Dakota Pipeline Authority

Rail Loading Map...The North Dakota Pipeline Authority has released a new map that indicates the locations of twenty-two crude oil loading facilities in North Dakota (see link below). The capabilities of the facilities range in size from a handful of tank cars to 100+ tank cars loaded per day. The map also includes an outline of the Bakken and Three Forks formations and all active wells from October 2012.

North Dakota rail loading facilities map

_____________________________________________________

EIA Updates U.S. Oil Production Trends

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

---

U.S. crude production in April 2014 was 8.4 million barrels per day (bbl/d), with two states, Texas and North Dakota, accounting for nearly half of this total. Texas production topped 3.0 million bbl/d for the first time since the late 1970s, more than doubling production in the past three years, and North Dakota production broke 1.0 million bbl/d for the first time in history, nearly tripling its production over the same period, according to data from the U.S. Energy Information Administration's Petroleum Supply Monthly report.

Combined crude oil production volumes from Texas and North Dakota reached 4.0 million bbl/d. From April 2010 to April 2014, crude oil production volumes in North Dakota and Texas grew at average annual rates of 37% and 28%, respectively, versus 2% average annual growth in the rest of the United States. During this period, North Dakota and Texas's combined share of total U.S. crude oil production rose from 26% to 48% (see graph above). By comparison, the Gulf of Mexico's crude oil production share declined from 27% to 17%.

Source: U.S. Energy Information Administration, Drilling Productivity Report
Note: Production totals are for all counties that contain part of the shale formations listed above.

---

Gains in Texas crude oil production come primarily from counties that contain unconventional tight oil and shale reservoirs in the Eagle Ford Shale in the Western Gulf Basin, where drilling has increasingly targeted oil-rich areas, and multiple reservoirs within the Permian Basin in West Texas that have seen a significant increase in horizontal, oil-directed drilling. North Dakota's increased oil production comes primarily from counties that contain the Bakken formation, also a tight oil reservoir, in the Williston Basin, where crude oil production growth has spurred a rise in crude-by-rail transportation. Since April 2011, the largest monthly average increase in production has come from the Eagle Ford, with an average monthly increase exceeding 32,000 bbl/d, more than twice the 14,000 bbl/d increase in the Permian. Production from the Bakken increased 19,000 bbl/d on average each month over the same period.

Source: EIA

Bakken News Links - June 2014

6/28/2014 ND regulator wants state to monitor oil trains
6/26/2014 Company gets shipping commitments for ND pipeline
6/25/2014 Oil from U.S. fracking more volatile than expected
6/25/2014 North Dakota to double pipeline capacity
6.25.2014 Oil train info shows heavy traffic
6/24/2014 Pipeline summit upbeat
6/23/2014 Strata-X Energy begins drilling in Emmons County
6/19/2014 250 barrels of saltwater leak into ND creek
6/18/2014 Report says diesel still used on ND frack jobs
6/18/2014 Washington state residents oppose oil shipments
6/18/2014 Mechanical failures blamed for 2 ND oil spills
6/17/2014 April oil production exceeds one million barrels per day
6/17/2014 Summit announces $300 million plan for Bakken infrastructure
6/17/2014 Utica shale compared to Bakken
6/17/2014 Helms offers 2014 midyear update
6/16/2014 Saltwater spilled on Mountrail County well site
6/15/2014 Canadian company offers oil solutions for the Bakken
6/10/2014 Oil pipeline spill cleanup continues
6/9/2014  ND oil boom poses threat to Minnesota wetlands
6/9/2014  Flaring rules may slow oil field development
6/8/2014   Pipeline trenching causes ND oil spill near Alexander
6/7/2014   Nearly 700 barrels of crude spill at oil well site
6/5/2014   States balk at keeping oil-train info from public
6/3/2014   Findings of Bakken oil safety studies questioned
6/2/2014   ND requires natural gas capturing plans

Summit Midstream Announces Bakken Projects

Dallas-based Summit Midstream Partners recently provided a commercial update for its wholly owned operating subsidiary, Meadowlark Midstream Company, LLC, and announced the development of a new oil, gas and water gathering system by its new, wholly owned operating subsidiary, Tioga Midstream, LLC. Meadowlark is composed of the Divide Crude Oil & Water Gathering System and the Polar Crude Oil & Water Gathering System, both of which are located in the Bakken Shale Play in North Dakota. Meadowlark also owns the Niobrara Gathering & Processing System, which is located in the Denver-Julesburg Basin in Weld County, CO. more

EIA Updates U.S. Crude Export Trends

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

---

The United States exported 268,000 barrels per day (b/d) of crude oil in April (the latest data available from the U.S. Census Bureau), the highest level of exports in 15 years. Exports have increased sharply since the start of 2013 and have exceeded 200,000 b/d in five of the past six months. The increase in crude exports is largely the result of rising U.S. crude production, which was 8.2 million b/d in March. more

Source: EIA

EIA Updates Bakken Rail Transport Trends

Source: U.S. Energy Information Administration
Note: Data are as of March 2014. PADD denotes Petroleum Administration for Defense District.

---

As onshore crude oil production in the United States increased over the past few years, producers have increasingly moved crude oil out of production areas by rail. Producers in North Dakota, in particular, have used rail to ship crude oil to refineries and midstream companies at newly built unloading terminals on the East Coast and West Coast.

The number of rail carloads of crude oil began rising in 2012, as production in the Bakken Shale and other shale plays grew. According to the North Dakota Pipeline Authority, Bakken rail outflow capacity totaled 965,000 barrels per day (bbl/d) at the end of 2013, compared to 515,000 bbl/d of pipeline capacity. While some refineries are being built or planned for the area, most Bakken crude oil will continue to be moved out of the region to be processed at refineries in other parts of the country.

Domestic crude oil supply to East Coast (PADD 1) refineries has increased with rising U.S. crude oil production in the Bakken area and expansion of crude-by-rail infrastructure. Imports from foreign countries into the East Coast of light sweet crude oil, which is of a quality similar to Bakken crude, have declined as a result of increased receipts of Bakken crude from PADD 2. Some East Coast refineries have on-site rail unloading terminals, while other refineries receive crude by barge after it has been moved by rail to an unloading terminal:

• Two refineries, PBF Energy in Delaware City and Philadelphia Energy Solutions in Philadelphia, receive crude oil directly by rail, with unloading capacity of 120,000 bbl/d and 160,000 bbl/d, respectively.
• Enbridge's Eddystone Rail facility, located outside Philadelphia, began operating in May 2014. This facility is able to transfer 80,000 bbl/d to Philadelphia-area refineries by barge after receiving rail shipments.
• Other rail unloading facilities that transfer crude by rail to barge for transport to refineries are located in Yorktown, Virginia, and Albany, New York.

On the West Coast (PADD 5), increased receipts of Bakken crude have partially offset declines in production from California and Alaska. West Coast refineries have ramped up crude-by-rail volumes in recent years. Several large unloading facilities are planned to come online in the next few years:

• Tesoro, which currently has capacity to unload 50,000 bbl/d at its refinery in Anacortes, Washington, has proposed a 360,000 bbl/d facility at the Port of Vancouver, also in Washington.
• In addition, several new unloading terminals are planned to open in 2014 and 2015, with most of the unloading capacity in California and Washington.

In addition to crude-by-rail loading facilities in the Bakken, new rail terminals have been built to transport crude oil production from the Niobrara Shale formation in Colorado and Wyoming, and the Permian Basin in West Texas and southeastern New Mexico. Several crude-by-rail loading terminals are already operating in the Niobrara, which has access to a vast rail network to transport abundant coal production from Wyoming's Powder River Basin. While the Permian Basin has much greater oil production than the Niobrara Shale, it also relies more on pipelines to transport crude oil production. However, in response to significant production growth there, particularly from tight oil formations, Rangeland Energy last month began construction on its RIO Hub rail loading terminal in Loving, New Mexico. This terminal is scheduled to begin operating later this year, with the project's developers expecting to eventually raise its capacity to 100,000 bbl/d.

Source: U.S. Energy Information Administration, U.S. Energy Mapping System
Note: Interactive version is available on the U.S. Energy Mapping System website.

---

In addition to crude oil pipeline flows, EIA's U.S. Energy Mapping System now enables users to see where these growing crude oil flows by rail are occurring. The mapping system now includes a new layer showing the location of crude-by-rail terminals in the United States (seen the map above). In addition to the new Crude Oil Rail Terminal layer, the U.S. Energy Mapping System has two other new layers—for ethylene crackers and wind turbines—and has several updates to existing layers.

Source: EIA