New Bakken Pipeline in the Works

May 21, 2015 Elizabeth Alford

American Midstream Partner announced a strong first quarter and that they are on target to finish a new Bakken oil gathering system by the second quarter of 2015.

In a press release this week, American Midstream Partners reported an increase of nearly 50% over the prior year quarter, with gross margin of $33.8 million and adjusted EBITDA of $15.6 million.

The company’s forecasted growth capital expenditures includes construction of the Bakken crude oil gathering system that consists of a 39-mile pipeline with the capacity to transport up to 40,000 Bbls/d crude oil. This pipeline will serve to provide producers in North Dakota with access to refinery, rail, and pipeline markets.

“Steve Bergstrom, Executive Chairman, President & CEO said that “Commissioning of the fee-based Bakken crude gathering system is underway with startup expected by the end of the second quarter. The project has remained on track despite weather challenges slowing the construction process. We’re in advanced negotiations with several producers to add meaningful truck volumes to the system which will provide producers with access to premium refinery, pipeline and rail markets. Throughput volumes are expected to ramp up to 20,000 barrels per day in the second half of the year.”

New Resources for Bakken Producers

May 20, 2015 Elizabeth Alford

American Midstream Partners announced a strong first quarter and revealed they are in process and on budget to finish a new Bakken oil gathering system by the second quarter of 2015.

In a press release this week, American Midstream Partners reported increases of nearly 50% over the prior year quarter, with gross margin of $33.8 million and adjusted EBITDA of $15.6 million.

“Steve Bergstrom, Executive Chairman, President & CEO said “Commissioning of the fee-based Bakken crude gathering system is underway with startup expected by the end of the second quarter. The project has remained on track despite weather challenges slowing the construction process. We’re in advanced negotiations with several producers to add meaningful truck volumes to the system which will provide producers with access to premium refinery, pipeline and rail markets. Throughput volumes are expected to ramp up to 20,000 barrels per day in the second half of the year.”

Most Americans Aren't Familiar with Keystone

May 19, 2015 Elizabeth Alford

Oil pipeline safety continues to be a huge political issue in Washington, but a recent poll suggests that many Americans aren’t quite so concerned.

An energy poll by the University of Texas found that less than half of the 2000 people surveyed were even familiar with the Keystone XL Pipeline, the controversial pipeline that would carry millions of barrels of crude from Canada to Texas.

Ever since the pipeline was proposed in 2008, it has been a hot-potato topic and a litmus test for President Obama’s concerns on energy and environmental issues. Of particular importance is the issue of climate change, with many environmental groups believing that approving the construction of the pipeline would be bad news for the climate.

Surprisingly, the U.T poll also revealed that only 6% of the Keystone opponents listed climate change as their main cause for opposition. This seems very low, considering that climate change has been a key part of environmental groups opposition to Keystone XL.

“The Washington Post theorized that “many people may view climate change as more distant and feel that most benefits of tackling it wouldn’t arrive for many years. Issues like that may not resonate as much with people as would more direct, immediate, tangible matters like our pocketbooks and the well-being of our local communities.”

BNSF Railway Abandons Plans to Buy Tanker Cars

May 18, 2015 Elizabeth Alford

Citing ‘customer complaints’, the BNSF railway has abandoned plans to buy 5,000 crude oil tankers.

Typically, leasing companies or oil companies own the tank cars that move crude along the tracks and not the railroads themselves. But last year, BNSF requested proposals from railcar manufacturers to produce cars for them that were stronger and safer cars than the current DOT standards. The company had hoped that producing cars with thicker shells, reinforced ends and thermal blankets would reduce the risks of using trains to haul oil.

Over the past two years, BNSF Railway has been involved in a number of incidents including a derailment and fiery crash that caused the evacuation of a small town in North Dakota just last week. The company confirmed that the eight cars that derailed were the unjacketed CPC-1232 models that the federal government would like phased out by 2020 due to safety concerns.

Related: Bakken Crude Train Derails

“A company spokesperson commented about the company’s decision to scrap the plans by saying, “If our customers do not want us in this business, we’ll re-evaluate. We’ll do something else.”

The debate over rail safety is continuing to escalate and just last month, NTSB urged stricter standards due to findings from study of recent train derailment accidents. They concluded that the current fleet of DOT-111 tank cars rupture too quickly and result in spillage and ignition.

EOG Waiting Out Oil Prices

May 14, 2015 Elizabeth Alford

EOG Resources will continue to hold off on Bakken well completions until crude prices stabilize.

Pulling back, slowing down and waiting it out is the preferred strategy for oil producers looking for strategies during the current pricing crisis.

During an earnings call, EOG says that they are benefiting greatly from the pull-back in activity and progress is being made to lowering cost in each phase of their operations. The company announced a first quarter loss net loss of $169.7 million.

Bakken Activity

The slowdown in activity has allowed EOG to focus on three things in its Bakken operations

Operational efficiencies and lowering well cost. Currently, a typical 10,000 foot lateral is now drilled in just over 10 days.
Using new technical data from our integrated completion process to further adjust and tailor high density completion designs to specific formation properties. These modifications are leading to improved results.
Maintain a more stable production base with minimal downtime

“William Thomas, chairman and CEO commented that “the company has no interest in accelerating oil production at the bottom of the commodity cycle. “We continue to adjust to the lower oil price environment by reducing well costs and operating expenses and by making significant well productivity improvements through technology advancements.”

Other Bakken Highlights

Well costs are currently 14% less than the 2014 well cost.
2015 well costs will be as much as 20% below 2014 levels with a target of $7.4 million.
Began production on eight wells in two 500 foot space patterns in the partial area.
Initial per well production rates from a five-well pattern averaged 1,235 barrels of oil per day and a three-well pattern averaged 1,345 barrels of oil per day.
Focused activity on its Parshall Core acreage in the North Dakota Bakken where 500-foot spacing results were very encouraging. Operational improvements continue to generate efficiency gains and lower well costs. Average well costs in the first quarter were down 14 percent from 2014 levels.

“Billy Helms - EVP, Exploration & Production said that “For the Bakken, as we continue to experiment with our completion designs we’re seeing different areas of the field have different rock properties and we’re tailoring those completion designs to match those rock properties.”