North Dakota officials said Friday only 47 percent of the state’s crude oil was shipped out by rail in June, the lowest percentage in five years or so and well below the 75 percent mark hit in 2013.
At the same time, crude oil production has remained relatively stable over the past year, despite falling prices.
In June, the latest figures available, the state’s wells produced 1.21 million barrels of crude, nearly all of it from the legendary Bakken formation, state officials said Friday.
That’s only 1.4 percent below the record production hit in December of 1.23 million barrels a day; production hasn’t changed more than 10 percent over the past year despite steadily falling prices.
Also in June the state set another record for natural gas production, a byproduct of crude oil production.
The price slide for Bakken crude accelerated the past month.
The sweet and light Bakken crude was fetching only $28.50 a barrel Friday, said Lynn Helms, director of the state’s Department of Mineral Resources, the lowest since December 2008 and down 40 percent since just June when it was $47.73.
The record Bakken price was $136.29 set on July 3, 2008, Helms said.
Bakken crude is discounted $10 to $15 a barrel off the U.S. benchmark of West Texas Intermediate crude, which closed under $42 Friday. The long transport to market, and the fact that many of the Gulf Coast refineries set up for heavier crude than the sweet, light Bakken leads to the discount, market experts say.
The change in rail shipments is significant, state officials said.
For the past four years, about two-thirds of the state’s crude has been shipped by rail out of state.
The rapid increase in rail shipments of oil, including several explosive derailments – one that killed 47 people in Quebec – have concerned the public and government officials. It’s also been an argument used by TransCanada officials to approve the Keystone XL pipeline that would cross western South Dakota. The Canadian company’s leaders say the pipeline would carry up to 100,000 barrels of Bakken crude a day, or about 8 percent of current production.
Most of the nation’s increased rail shipments of oil have been of North Dakota Bakken crude that has been found to be more volatile than other types of crude oil and even gasoline.
The shift of more North Dakota crude shipped by pipeline and truck, or used or refined in the state, means in June about 800 rail cars a day were needed to ship the oil – or about 7.5 long unit trains – compared with about 1,118 cars in December, which took about 10.5 unit trains of 106 cars each per day.
A rail car holds about 710 barrels of crude oil.
Most of the oil trains go to refineries on the East Coast, state officials said.