Bakken Housing Challenges Continue

April 5, 2013 R.T. Dukes

Finding adequate housing in the Bakken has been an issue for several years. Now, there are more options, but the question is affordability. Highly paid oilfield workers can afford $2,000 per month, but the average resident not employed in the oilfield can not. A Wall St Journal article published a little earlier in the day dives into the details. Follow the link at the bottom to read the full article. Highlights from the article include:

Working population up 70% in the past three years
Average home listed for $253,000 in 2012
One bedroom apartments as much as $2,000/month
Considering increase in ND's housing incentive fund to $50 million from just $15 million
State needs 7,300 affordable housing units constructed over the next two years
Wages have risen to fast for subsidies to reflect needs

Douglas Rail Terminal Planned by Enserco in Wyoming

April 4, 2013 R.T. Dukes

Enserco Midstream plans a new crude oil trans-loading facility in Douglas, WY. The Douglas Rail Terminal will have loading capacity of 60,000 b/d, initially, with the potential to expand to 120,000 b/d. With a great location in the heart of Wyoming's growing crude oil plays, I suspect a lot of the crude moved will be local. The facility will have the ability to take and move crude delivered from Canada and the Bakken. If rail can provide better netbacks than local pipelines, you can bet Montana and North Dakota production will make the jump onto the railway.

With its prime location on the main line of the BNSF Railway, the Douglas Rail Terminal provides access to storage and refining markets across the United States," said Griff Jones, president and CEO if Twin Eagle Resource Management

Operations are expected to begin in June 2013, with full unit train operations available in March 2014.

"Our Douglas Rail Terminal will be one of the first to provide rail export to companies in this growing producing region of the country. It expands our ability to provide our customers with cost-effective transportation of excess production," said Tim Kirwin, Enserco VP.

Enserco Midstream, LLC, is a wholly owned subsidiary of Twin Eagle Resource Management, LLC.

Indigo Resources Building Bakken Rail To Barge Facility in Osceola, AR

April 3, 2013 R.T. Dukes

Indigo Resources Ltd plans to build a rail to barge facility in Osceola, Arkansas, to improve movement of Bakken and Canadian crude to Gulf Coast markets.

A 610-acre site at mile marker 784.5 on the Mississippi River will have 3,000 ft of river frontage, three sets of manifolds, five rail loops, and 16 miles of track with room for 100+ car unit trains. The site has direct rail access to Minot and Tioga, with shipments moving as much as three times faster than long rail hauls to the Gulf Coast. Increased speeds lead to higher tank car utilization or to put it another way - cost savings. Deliveries are expected to take less than 10 days and savings is estimated at $1-2 per barrel compared to rail alone.

Tomas Fuentes, project manager, stated "Unit trains will be able to come directly from Minot or Tioga without hitting any rail yards or switching stations."

A total of 15 refineries with 3.4 million barrels per day of demand is downstream of the site on the Mississippi River.

The terminal will have the capacity to unload two unit trains of light crude per day and three to four manifest trains of bitumen per week.

"Combining rail and barge will lower the overall cost to the market" explains John Park, Director of Indigo Resources Ltd. "Plus due to our location, Indigo will be able to turn around the unit trains faster and in today`s high cost of rolling stock, this is an added bonus."

The terminal will allow for crude movement to the lower Mississippi at cheaper rates than rail. The terminal will have a total of two million barrels of storage capacity:

4 x 250,000 bbl tanks
10 x 100,000 bbl tanks

The facility will be flexible enough to handle multiple crude types and Indigo Resources expects deliveries from Canada, Colorado, Montana, North Dakota, and Wyoming.

Construction is expected to begin in the fourth quarter of 2013 and the facility should be in service in late 2014.

South Dakota Frack Sand Coming To The Bakken?

March 27, 2013 R.T. Dukes

Cambrian Enterprises has registered mining claims near Deadwood, Rapid City, and Custer in South Dakota. While much of the frack sand used around the country comes from Wisconsin, we might begin to see supply coming from our neighbor, South Dakota, before long.

"This is the closest known claim to the Bakken. I think this is an excellent idea for participating in the economic event called the Bakken," Ganje said.

Sand is the proppant of choice across much of the Bakken and that isn't expected to change. It is estimated that more than 2 million tons of sand were consumed completing wells in the Bakken in 2012.

Will Bakken Oil Production Boost North Dakota Past Texas?

March 25, 2013 R.T. Dukes

Bakken production surpassed 700,000 b/d in December 2012 and some analyst believe it is pumping closer to 800,000 b/d now. Production has surged over the past two years from just ~275,000 b/d in January 2011. On analyst stated that drilling in the Bakken -

"is like printing money. Capital is coming from all around the world, even Europe and Asia," said Fadel Gheit, an energy analyst at Oppenheimer. "It has single-handedly changed the outlook for oil production."

With an inventory of 30,000 plus wells, many are beginning to ask if the Bakken is the biggest oil play and oil producing region in the US. Texas produces a little more than 2 million b/d of oil and it's impossible to think the Bakken could eventually reach that level. If multiple benches of the Bakken and Three Forks prove commercial, I won't be the one saying it won't happen.