Investors Business Daily
Bakken-Area Oil Prices Tumble On Pipeline Shortage

Wednesday, February 08, 2012

Oil producers in the Bakken shale hit the wall this month as production outstripped pipeline capacity and prices toppled.

Bakken crude priced at Minnesota's Clearbrook terminal dropped 33% year to date to close near $71 a barrel Wednesday. Canadian heavy crude from tar sands staged a similar fall.

The Bakken shale, centered mainly under North Dakota and Canada's tar sands, has helped curb a long-term decline in North American oil production. The Bakken has also fueled optimism that the deluge of natural gas production from shale plays, which has forced gas prices to decade lows, might translate to a similar surfeit in oil.

Bakken crude prices began to fall in January, says Adam Bedard, senior director with Bentek Energy, just as regional pipeline and rail capacity fell behind production.

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