Skip to main content
You have permission to edit this article.
Edit

Crude by rail shipments down by half as North Dakota oil production hits two-year low

  • 0
Oil Trains

A train makes its way along the tracks Oct. 6 near downtown Minneapolis.

Rail shipments of petroleum from Midwestern oil fields to East Coast refineries have plummeted as North Dakota’s oil production has fallen to a two-year low.

Production dropped below 1 million barrels per day for the first time in more than two years, officials said Thursday — yet another reminder that the drilling boom is over in the country’s No. 2 oil state due to the slump in world oil prices.

The state produced an average of 981,039 barrels of oil daily in August, down from 1.029 million in July, the state Department of Mineral Resources said. Oil production numbers typically lag at least two months.

Those numbers are reflected in the crude shipment data collected by the U.S. Energy Information Administration, which show rail shipments from the Midwestern region were down 49 percent from the previous year in July.

Shipments from the Midwest to the East Coast — which represent more than half of the region’s production and move over rail lines crossing Minnesota and Wisconsin — were down by similar numbers.

The 5.4 million barrels that traveled to East Coast refineries in July was even 15 percent lower than in July 2013 when production was on the rise and about 60 percent less than the peak volume in 2014.

That works out to fewer than three trains per day, about half the number that railroads reported to state officials in 2014.

BNSF, which hauls the majority of crude oil through Wisconsin, notified state authorities in August that an average of 14 oil unit trains per week are rolling on its tracks along the Mississippi River. 

Canadian Pacific has not filed any updates since December 2014, when it reported an average of nine trains per week running through La Crosse County.

North Dakota celebrated when its Bakken oil fields first surpassed the 1 million-barrel-per-day mark in April 2014, on the way to a record in December 2014 of 1.22 million barrels daily. But low oil prices have dried up investments for drilling new wells that would counter declining production from older wells, North Dakota Petroleum Council President Ron Ness said.

“We will see a turnaround when we get oil prices that inspire investment and capitalization back into the Bakken,” Ness said. “Until we see that, we’re probably going to continue to decline to some extent.”

There were 33 drill rigs operating in North Dakota’s oil patch Thursday, down from a high of 218 in May 2012. However, the number of producing wells reached an all-time high of 13,289. The state also produced 1.64 billion cubic feet of natural gas per day in August, down from 1.69 billion cubic feet daily in July.

North Dakota crude fetched $39.75 per barrel as of Thursday. While oil prices are higher than in August and September, they’re still far below the record of $136.29 in 2008. World oil prices have gained about 15 percent since OPEC nations announced last month that it would cut their daily production, but international prices are still about half of what they were in the summer of 2014.

The continued decline in oil revenues led North Dakota’s Legislature to order up fresh spending cuts for most state agencies to help address a $310 million shortfall in the state budget. That was on top of cuts Gov. Jack Dalrymple ordered in February due to a $1.1 billion shortfall.

Ness said the news isn’t all bad: North Dakota hasn’t budged from the runner-up oil producers spot, behind only Texas, and it’s one of four states to have ever put out 1 million barrels per day.

The Bakken formation remains a “world class resource,” he said, noting that it supports tens of thousands of jobs and that the efficiency of newly drilled wells has grown substantially higher over the past couple years.

“We’ll be back,” he predicted. “We’ll be able to reach this million barrel milestone again, hopefully in the near future.”

0 Comments
0
0
0
0
0

Get local news delivered to your inbox!

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

Get up-to-the-minute news sent straight to your device.

Topics

News Alerts

Breaking News