Bakken oil may soon go to Gulf Coast refineries

2010-09-14T02:00:00Z Bakken oil may soon go to Gulf Coast refineriesBy LAUREN DONOVAN Bismarck Tribune Bismarck Tribune
September 14, 2010 2:00 am  • 

For the first time in North Dakota's production history, oil pumped here could go south to Gulf Coast refineries.

Monday's announcement of yet another new oil pipeline project represents truly groundbreaking news for Bakken oil.

TransCanada Corporation opened a call for commitments for a new Bakken Marketlink pipeline, which would start in Alberta, pick up Bakken oil at Baker, Mont., and continue to Cushing, Okla., for transport to Gulf Coast refineries.

Justin Kringstad, director of the North Dakota Pipeline Transportation Authority, said the news is very important for the oil patch.

"It targets two of the largest markets and the potential is very high for better pricing, for folks to be taking ahold of what we have to offer here," Kringstad said. "It says a lot about the Bakken play."

TransCanada plans to pick up 100,000 barrels a day at Baker from other smaller pipelines that would originate in Dunn and McKenzie counties.

He said TransCanada's proposed Keystone XL pipeline would be the first direct southern pipeline to Cushing, which is a hub to U.S. refineries in the Gulf Coast region. North Dakota oil is primarily exported east toward the Great Lakes region.

TransCanada has been probing oil producers for interest in the Bakken Marketlink project and found enough to formally call for an open season. Oil producers or shippers have until November to make firm commitments.

The Keystone XL will also transport crude from Canadian oil sands. A 2009 study by the North Dakota Industrial Commission found the same pipeline could be used to load up both products in distinct intervals, not mixed.

The company plans to put the pipeline into service in early 2013.

TransCanada's announcement comes just weeks after Enbridge Inc., also of Canada, announced it will build a pipeline to transport 145,000 barrels per day of Bakken oil from Mountrail County, north to Canada, and back into the states to a hub in Minnesota.

The two will add to the current export pipeline and rail capacity of 425,000 barrels per day.

North Dakota's daily production stands at 315,000 barrels, but is paired for transport with 65,000 barrels per day from eastern Montana.

Kringstad said the TransCanada Bakken Marketlink and the Enbridge line are needed going forward.

"This will be there for when production ramps up for the next several years and give the producer the confidence to continue to develop," he said.

It's estimated that production could exceed 450,000 barrels a day by 2013 and reach 1 million barrels a day by 2020.

(Reach reporter Lauren Donovan at 701-748-5511 or lauren@westriv.com)

Copyright 2016 Bismarck Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(8) Comments

  1. DustOff3
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    DustOff3 - September 14, 2010 3:57 pm
    Lauren, anybody, Are the refineries in ND close to their capacities? How long would it take to build another refinery? I keep hearing the time frame is long and investment huge which means the risks involved with the financial venture is gigantic? Anyone address these questions?
  2. NDresident
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    NDresident - September 14, 2010 12:20 pm
    We don't have the population base to support more refined oil. If we refine it here, then the gas would still need to be shipped to other markets at a higher price to those consumers when you add the shipping costs. If we had a larger population base, I'm guessing another refinery would make sense. As far as deisel...they alrealdy have one in the works by Williston (just outside of Trenton). It is supposed to refine 20,0000 barrels of deisel a day...and would be expanded up to 100,000 as the demand increases. This refinery is for industrial deisel (for oil rigs, farm equipment, large deisel engines, etc...)
  3. Joker1
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    Joker1 - September 14, 2010 12:15 pm
    Actually the Industrial Comission is doing a study to see if it is feasible to add refining capacity to the state. Corval Group is heading up the study.
  4. Daviol
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    Daviol - September 14, 2010 9:50 am
    We could build a relatively small refinery, making mostly diesel fuel, which could be consumed in a small area - North and South Dakota. The rest could be shipped out of state.
  5. smokingcrater
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    smokingcrater - September 14, 2010 9:45 am
    Dickinson Midget said: "Why would we refine it here? Do you think North Dakota would use all the refined oil products? Much easier to build one pipeline to ship the raw product out. Refine here and then you've got more truck traffic to deal with. Or will we build multiple pipelines to ship out the refined products? "

    You can use the same pipeline. Better yet, we ship out zero crude, and send out refined products.

    Looking back into history, the producers of the raw materials usually get the short end of the stick. They may comparatively very little, the real money is in the value adds. ND should absolutely take a close look at the State Mill, and seriously consider the ND State Refinery.

  6. Dickinson Midget
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    Dickinson Midget - September 14, 2010 9:22 am
    ndcoalmn said: "Refine the crude oil in ND! Creates higher paying jobs in ND! Export the refined oil! Come on ND leaders step up to the plate & don't lose this opportunity to provide for future generations."



    Why would we refine it here? Do you think North Dakota would use all the refined oil products? Much easier to build one pipeline to ship the raw product out. Refine here and then you've got more truck traffic to deal with. Or will we build multiple pipelines to ship out the refined products?
  7. ndcoalmn
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    ndcoalmn - September 14, 2010 5:58 am
    Refine the crude oil in ND! Creates higher paying jobs in ND! Export the refined oil! Come on ND leaders step up to the plate & don't lose this opportunity to provide for future generations.
  8. novik1
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    novik1 - September 14, 2010 4:57 am
    Makes sense to me. We have a refinery in our own back yard, yet we send it off to other states. In return our price at the pumps compared to Fargo can range from 25 cents per gallon higher than Fargo. The excuse I have heard at one time for this reason is the transportation cost of delivery, we have to bring it in from a distance. Something doesn't add up here. If someone can correct me, this would be of some help in understanding why the consumers in the Bismarck area are getting ripped off
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