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Operators have been preparing for harsh weather following a severe 2010-11 winter that saw record snowfall. Snow melt and spring rain contributed to flooding across North Dakota that lasted through midyear.
"Infrastructure build out is the big story," Hume of Continental said when asked about how operators could lessen weather-related consequences. "Most experienced operators construct lease roads and well locations prior to the frost setting in, which can be as deep as 6 ft below the surface."
Acknowledging that it's difficult to forecast rain and flooding, Hume said most operators will pay attention to potential weather consequences when designing roads and selecting wellsites.
Rail's share of oil, products
As of 5 years ago, North Dakota had no railroad terminal to handle crude oil.
Today, oil rail terminals exist in Minot, Stampede, Donnybrook, Ross, Stanley, New Town, Zap, and Dore. More are being developed in Belfield, Berthold, Trenton, Epping, Tioga, Fryburg, Ross, and Dickinson.
Dalrymple said the state expects to have the crude rail capacity to ship 315,000 b/d of oil by yearend.
"Rail projects that are under way will more than double that capacity to 706,000 b/d by late 2012," Dalrymple said.
The US Energy Information Administration reports more US crude oil is being moved by rail, especially from North Dakota, but pipelines remain the most popular transport option, carrying about two thirds of US oil and petroleum products.
The Association of American Railroads (AAR) reports nearly 300,000 tank cars transported US oil and petroleum products during the first 10 months of 2011, up 9.1% from the same period in 2010.
The growth in petroleum-by-rail shipments surged ahead of the 1.8% increase for all railroad cargo combined during the same period, AAR said.
"Tank cars would also be useful in the major oil hub of Cushing where a glut of supply is depressing the key US benchmark crude oil price," EIA said. "Pipelines bringing oil into Cushing from the north are nearly full, and there is not enough pipeline infrastructure to move oil south out of the area to Gulf Coast refineries."
The Surface Transportation Board, a federal agency that resolves railroad rate and service disputes and reviewed railroad mergers, told EIA that it saw little movement in recent months of crude oil out of Cushing by rail.
Burlington Northern Santa Fe (BNSF) and others are building or expanding terminals and adding tank cars to transport Bakken oil to Gulf Coast refineries.
On Nov. 7, BNSF's first crude oil unit train on the Bakken Oil Express, a rail hub near Dickinson, ND, departed for St. James, La., with 70,000 bbl. Bakken Oil Express capacity is 100,000 b/d, and a second phase will boost that to more than 250,000 b/d.
Pipeline projects proliferate
The North Dakota Pipeline Authority reported existing oil pipeline capacity of 443,000 b/d.
Dalrymple said, "Plans are under way to further expand our total capacity to more than 1 million b/d by 2012."
Enbridge Energy Partners LP on Oct. 28 announced a series of projects called the Bakken Access Program to expand the gathering capacity on its North Dakota system by 100,000 b/d. The $90 million expansion is scheduled to be in service by early 2013.
It involves increasing pipeline capacities, adding storage tanks, and adding truck-access points across western North Dakota.
Bakken Access complements the existing 120,000 b/d Bakken Expansion Program for EEP's pipelines.
Rangeland Energy LLC executed a long-term agreement with refiner Flint Hills Resources for handling crude oil at Rangeland's crude oil loading terminal in Williams County, ND.
The terminal, the COLT Hub, and pipeline, the COLT Connector, are scheduled to be in service by first quarter 2012. Hub construction began in May.
TransCanada's proposed Keystone XL pipeline, to be built primarily to carry bitumen from the Canadian oil sands south to the US Gulf Coast, eventually would be able to accommodate 200,000 b/d of Bakken oil. The US government has delayed making a decision on the pipeline. The pipeline's proposed route passes near the southwest corner of North Dakota.
Oil industry sources say Keystone could provide an on-ramp for Bakken crude and would relieve transportation bottlenecks. Ultimately, Keystone would back out imports landing at Gulf Coast refineries.
Enbridge Inc. plans to reverse the flow of the Seaway oil pipeline to move up to 400,000 b/d of crude from Cushing to the Gulf Coast.
The reversal will help debottleneck Cushing, where full storage is depressing oil prices. This could make room for Bakken and West Texas oil and ease downward price pressure.
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