How Montana Ranks in Energy Resources

Montana is a state rich in natural energy resources. The eastern part of the state has greatly benefitted from the American energy revolution reports the US Chamber of Commerce’s Energy Institute on its new webpage. The webpage — http://www.energyxxi.org/states/ — measures how states compare on energy, showing where each state ranks in energy production (Montana ranks 21st) and facts about how the industry impacts jobs and the local economy.

About Montana the website reports, the Bakken and Three Forks shale formations could yield an astonishing 7.4 billion barrels of crude, and numerous energy development projects are underway as a result. For example, Quantum Energy is planning to build five oil refineries in the Bakken region.

Keystone Crude Would Not be Exported by Sean Hackbarth, US Chamber of Commerce

Apparently getting four Pinocchios wasn’t enough to keep the president from spinning tales about the Keystone XL pipeline.  Last week in South Carolina, President Obama was asked about the project and answered:

Its proponents argue that it would be creating jobs in the United States. But the truth is it’s Canadian oil that’s then going to go to the world market. It will probably create about a couple thousand construction jobs for a year or two, but only create about 300 permanent jobs.

Glenn Kessler, the Washington Post’s Fact Checker, demolished this point about the oil being exported, writing:

Eagle's Success is the Business it Brings

The Eagles concert was a huge success for Metra Park and for Billings, reports Sue DeVries, Metra Park’s assistant manager. Even so, MetraPark didn’t really “make any money,” DeVries explained during the MetraPark Board meeting with County Commissioners. The good news is they didn’t lose any money either.

Not all of the overhead expenses are in yet, said DeVries. When they are, it may be that Metra Park may actually make a little bit. The county-owned facility did add $33,422 to the capital improvement fund as a result of the concert held a week ago, Tuesday.

“It is hard for people to understand, when you have $1.4 million in ticket sales, why you don’t make any money,” said DeVries, but it becomes more understandable when looking at costs. Metra Park essentially had to buy the event – that includes a band that costs $1 million and $250,000 for production equipment.

BNSF Plans $124 million Improvements

 

BNSF Railway Company (BNSF) announced that its 2015 capital program for its operations in Montana will be an estimated $124 million for rail maintenance and capacity improvement projects. Unlike other modes of freight transportation, U.S. railroads own and maintain their own networks. To ensure BNSF  network operates at optimal efficiency, each year the company allocates capital for infrastructure and expansion projects.

BNSF’s maintenance program in Montana will include 1,227 miles of track surfacing and undercutting work, the replacement of 52 miles of rail and about 345,000 ties as well as signal upgrades for federally-mandated positive train control (PTC).

MDU Refinery Operating; Possibly Another to be Built

MDU Resources Group, Inc. announced that the Dakota Prairie refinery initiated diesel product sales to the market on May 15. The 20,000 barrels-per-day refinery is the first greenfield fuels refinery built in the U.S. since 1976 and is co-owned and operated with Calumet Specialty Products Partners.

“We are excited to be sourcing the oil input for the refinery from the local Bakken region and selling diesel fuel directly into the market,” said David L. Goodin, president and CEO of MDU Resources. “ We are assessing the potential to further enhance the productivity of the plant in the future through modifications to increase its throughput capacity. We plan to utilize the expertise gained on the project to help develop future projects, such as a potential second plant presently being evaluated near Minot, North Dakota.”

Will the Bakken Boom Bust?

Hillary Stevenson, from Genscape

U.S. shale producers may begin producing less as crude prices drop to five-year lows – with some North Dakota Bakken operators already treading water – as rig counts nationwide are poised to decrease by nearly 600 in the next six months, according to Genscape.

U.S. oil rigs will fall below 1,100 for the first time in three years, bottoming out at 1,073 in August 2015, but the "Bakken may be the most disadvantaged [to cope with falling prices] of the three large [U.S] shale plays over the Permian and Eagle Ford," Genscape Oil Production Manager Jodi Quinnell said. It will take time for production to react to lower prices, and there could be more growth before production begins to decline if all the wells currently being drilled are brought online.

Oil Producer Turns to Lean Manufacturing

Oil producer Hess Corp has turned to a manufacturing process developed by automaker Toyota Motor Corp to cut costs and boost production as crude oil prices lag, according to a Reuters report.

Deploying a process called Lean manufacturing, and used by only a handful of other oil producers, the move has shaved roughly $400,000 off the cost of each North Dakota well in the past eight months, a savings that comes even as Hess adds more sand and frac stages on each well.

It has also sharply cut the time needed to drill a new well.

Oil Prices Put Pressure on Rail Rates

As North Dakota crude prices decline – latest prices are averaging $48 a barrel – there will be new pressure by producers to get better rates on rail shipping, which has varied from $9 to $15 a barrel.

"Rail rates should come down especially since the fuel surcharge is off," said Houston analyst Andy Lipow.

"The main effect will be from the market," said J. Warren Henry, vice president of research and policy for Continental Resources, the largest producer in the Williston Basin. "As operators slow down drilling, there will be a decline in demand for future pipe/rail capacity, so the pipe and rail guys will have to compete on price to file their pipe and cars."

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