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 firstname.lastname@example.org)