North Dakota Bakken Crude Oil

Mr. Norman,

Should you get a closer look, I would suspect a lot of what you're seeing might carry the following:

1170: Ethanol
1203: Gasoline w/up to 20% Ethanol
1987: Ethanol w/up to 5% Gasoline
1993: Varying Ethanol/Gasoline concentrations.

Suffice it to say if you do in fact start spotting "1267" trains (crude oil) in large numbers that would be a big deal of sorts as for the moment they should still be relatively rare away from the primary conduit corridors.

When researching possible changes in domestic LPG pricing (offered as an explanation for an otherwise unexplained increase in LPG tankers at a facility in the vicinity of Pan Am Railway's "Yard 8" in Portland, ME) I found this story discussing additional "tight oil" flowing into Cushing, OK. The company involved, Plains All American, is in the process of converting a LPG pipeline from Medford, OK over to crude service for oil supplied from the "Mississippian Lime formation in northern Oklahoma and southern Kansas". Further supplies of crude oil into the already oversupplied Cushing, OK terminal will have a nearly inevitable downward pressure on prices for domestic distillates going forward, especially given the dynamic in the CNBC article linked to earlier and the rising tide of oil supplies from the Bakken formation (and other tight oil sites throughout the middle United States).

Cushing, OK is particularly significant as "West Texas Intermediate (WTI), Cushing, OK" is used by the Chicago Mercantile Exchange as the benchmark price for the oil futures market which in turn is used as a global benchmark, along with Brent (North Sea) crude oil which is priced based on futures traded through the electronic IntercontinentalExchange based in Atlanta (Brent was formerly traded on the "live" International Petroleum Exchange in London).

This article, posted for general reference, should give the reader an idea of the enormity of change in the field production conditions in the Bakken formation in only the last three years. It is a very well written analysis by what the website describes as "a petroleum engineer working in the petroleum industry".

The article concludes with the following:

Conclusions

...

3. Because of the highly variable nature of shale reservoirs, the characteristics of the historical Bakken production, and the fact that per-well rates seem to have peaked, it seems unlikely that total Bakken production will exceed 2x to 3x current rate of 75,000 BOPD.

Currently according to the North Dakota Department of Mineral Resources, Oil & Gas Division production is just shy of 500,000 BOPD. In 2011 alone 200,000 BOPD have been added to production capacity and at this point I have yet to read an analysis which appears to be capable of estimating how much more additional production is expected to come online.

This article from the Tulsa World discusses how rail shippers are supporting Bakken oil production and has a nice summary of efforts being made to add facilities to handle new production.

"Rail can jump in at a lower cost," said Dan House, general manager of crude by rail at Musket Corp., during a talk Thursday at the Argus Americas Crude Summit in Houston. Access to refiners can make it a "long-term solution as well."

There is capacity to ship about 125,000 barrels a day of oil out of the Williston Basin area, according to House. The basin covers parts of North Dakota, South Dakota, Montana and Saskatchewan. That capacity is poised to double or triple in the next two to three years, according to House.

Not to minimize the impact of Bakken outbound crude, but railroad participation with inbound raw materials is a big story, as well. Frack sand and drilling, gathering, and line pipe are also pushing up participating carrier carloadings. This is more apparent in gas shale plays, such as the Marcellus in the east, given that the railroads do not participate in the outbound moves.

I almost asked this in the coal thread but I'll ask it here and go do some of my own research as well.

Is there oil in the Marcellus shale that is "economically recoverable"?

Obviously remembering history Pennsylvania was the first great U.S. oil strike.

From what I understand, the NY and PA sections of the shale are essentially natural gas. The more western areas (in OH) also produce crude. In contrast, I believe only about 10% of Bakken production is NGL.

In response to Jeff Smith's thread asking the question regarding "The Future of Rail" I posted a brief economic thesis.

Obviously, the changes to the U.S. oil and gas market are part of the answer.

Wall Street Journal coverage today of some trends previously mentioned in this thread:

You'll know the U.S. energy industry is really on the rebound when North Dakota's newfangled Bakken oil field starts pumping more crude than Alaska's stalwart Prudhoe Bay. Energy experts expect it to happen in 2012.
...
Crude-oil imports are falling, balance-of-trade payments are improving and thousands of oil-field jobs are being created from Texas to Ohio, from West Virginia to Wyoming. Moreover, the U.S. is beginning to export a significant amount of diesel and gasoline refined from crude and could begin exporting chilled natural gas next year.

Originally posted in the "Future of Rail" thread:

I found the following article in American Thinker, published today, very interesting:

I have reset the links that were on the original website for the reader's convenience.

The second story is that North Dakota hit a record high oil production in October of 488,000 barrels per day (bpd). This was up 100,000 bpd (or 25%) from June's production. Lynn Helms, director of the North Dakota Department of Mineral Resources, projects that the state's total oil production will exceed 500,000 bpd next year and 900,000 bpd the year after that. The state will soon surpass California (539,000 bpd) and Alaska (550,000 bpd), rivaling top-producing Texas (1.2 million bpd).

Another story reinforces these bracing estimates. The National Petroleum Council estimates that by 2035 -- if the regulators will just stop endlessly excreting new hurdles -- the U.S. will hit 3 million bpd of shale oil alone. There are about 14 to 16 new American shale oil fields just starting to be exploited.

This has led the federal Energy Information Administration to raise its estimates for total American liquid fuel output by nearly 40% -- for next year alone!

The prior report indicates that total (i.e., conventional and non-conventional) American crude oil production hit 5.8 million bpd in September of this year -- an increase of 300,000 bpd (or about 5.5%) from the year earlier. American crude oil production could hit 7 to 7.5 million bpd by 2013, and hit 8-10 million bpd by 2015. Add in natural gas liquids, and we may well hit 11-14 million bpd. That would place our crude oil production up there with Saudi Arabia and Russia and, when you add in our natural gas liquids and ethanol, would place us tops in the world by far in liquid fuel production.

In fact, it now appears that in 2011, America will become a net petroleum product exporter for the first time in 62 years.

Not only is America now a net petroleum product exporter, but as expert Dave Ernsberger (global director at energy consulting firm Platts) put it, "t looks like a trend that could stay in place for the rest of the decade. The conventional wisdom is that [the] U.S. is this giant black hole sucking in energy from around the world. This changes the dynamic."

I was utterly stunned to read the estimate which appeared to indicate that the U.S. was potentially on track to be the world's largest producer of liquid fuels within 10 years.

Maybe sooner than that. According to these guys http://www.cia.gov/library/publications ... 3rank.html the us in 2010 was a close 3rd behind Saudi Arabia and Russia. I think a big part of this story is how quickly this is changing. Geokeefe's report suggest the Bakken field alone could be 10% of US production by 2015.
It might be too soon to call it but just since July the trade defiect has quietly dropped a little every month. Taken together with reduced consumption forced on us by higher costs and a diversifing of energy sources (wind, solar, wood and biofuels) this seems to be a really fundamental shift in our economic outlook.

Gilbert B Norman wrote:But back on the rails, it will be interesting to see if railroad transportation will continue to be the long-term transport mode, as distinct from "stop gap" until a pipeline is built.

While it has typically been marketed as a "tar sands" pipeline, according to this bulletin from the Montana WatchDog, the Keystone XL actually has plans for spurs that would pickup oil from the Bakken formation in both Montana and North Dakota.

The people at Public Policy Matters make a note about Montana in this 27-page Dec. 12, 2011, report on Keystone XL pipeline by the Congressional Research Survey.
“One point missed in the debate is the construction of two spurs which will use the pipeline for transporting oil from the Bakken formation that underlies parts of North Dakota and Montana,” PPM editors tell readers.

Here is a quick recap of the opening of the Bakken Oil Express facility "just west" of Dickinson, ND. The news of this facility and its initial online throughput of 100,000 BOPT (Barrels of Oil per Train) was the first time I started paying attention to the Bakken at all.

Here an article from PRNewswire via Yahoo! news about the facility's first crude oil unit train.

Dickinson, ND (PRWEB) November 09, 2011
Bakken Oil Express LLC (BOE), is pleased to announce that the first unit train loaded with crude oil at its facility departed via the BNSF Railway, on November 7, and is destined for St. James, Louisiana. Located just west of Dickinson, the BOE Rail Hub has initial take away capacity of 100,000 BOPD and is the first multi-shipper crude by rail unit train facility in North Dakota.
BOE will receive oil by both truck and pipeline. The first train departing included 103 oil tank cars containing approximately 70,000 barrels of oil transported for BOE’s anchor shipper, Eighty-Eight Oil.

See the Emergency Response Guidebook for more information on the exact substance. Suffice it to say if your eyes were right it was not crude oil (1267).

Gilbert B Norman wrote:Enquiring mind is perplexed; if the train was MTY, which one would think the case moving WW, why was it still placarded?

Recent safety training provided by the local railroad to first responders clarified this exact question.

Cars are no longer placarded as "Residue" for a variety of reasons. This would be a change in practice from your experience in operations. That specific change was discussed as if it had been within the last twenty years. Thus all HAZMAT is placarded all the time regardless of car status. I'm sure there is some point where the designation could be removed but this would likely be after all residue has been removed. In the example of a typical tank car this would be several hundred gallons +/- of product (per our instructor's advice).