Energy Transfer Partners said during its most recent analyst meeting that they are still moving ahead with plans to build a pipeline between North Dakota and Patoka, Ill. Previous announcements from ETP claim the line could move as much as 320,000 barrels a day to Midwest refineries.
Enbridge Energy Partners previous announcement of a pipeline moving crude oil from North Dakota to Clearbrook, Minnesota was just approved by North Dakota regulators. The pipeline will have a capacity of 225,000 barrels of oil per day.
Enterprise Product Partners L.P. is making plans to build a new line from Stanley, North Dakota to Cushing, Oklahoma. The announcement this week about a new 340,000 barrel per day line is still just a hope at this point as Enterprise has yet to receive company board approval.
All three companies expect the lines can be operational in 2016. Any of these pipelines, when completed, will provide producers in the Bakken much needed optionality and market access. Reducing market constraints is one of the key ingredients needed to increase the prices paid at the lease. That will be a good thing for the mineral owner.
Seaway Pipeline and its impact on the Bakken Mineral Owner
Enterprise is a few weeks away from completing its “looping” of the Seaway Pipeline. Seaway pipeline was formerly a refined products pipeline moving products from the Gulf Coast to Cushing, Oklahoma. In 2012, the company converted the line to crude oil service and reversed the flow from Cushing, OK to the Houston area. Since January 2013, Seaway has been moving 400,000 barrels of oil per day from Cushing to Houston and the recent loop is expected to double this capacity.
“It’s not flowing yet, but it’ll be flowing later this month for sure,” James Williams, president of energy consultant WTRG Economics in London, Arkansas, said. “It’s going to give the folks north of Cushing more of an option to trade off going by rail or by pipeline.”
It seems only testing is left at this point.
The impact
Current capacity constraints and limited supply alternatives in North Dakota are depressing Bakken crude oil prices at the lease. As a royalty owner, you are paid this lease price, so you have a vested interest in new market developments affecting your region. Any completed pipeline, rail or waterborne project that increases capacity out of North Dakota translates to a higher royalty check for you. Who doesn’t want extra money in the bank each month?
