Schweigert, Klemin & McBride, P.C.

More pipelines? The price just went up

After less than a year of operation, the Dakota Access Pipeline is nearly full. There is more demand potential for it as the Bakken continues to expand production.

But new pipelines are not in the works for a lot of reasons. A new concern to add to the list is the cost of imported steel, which now has a 25 percent tariff on it.

Dakota Access Expanding

With less than a full year of operation, the Dakota Access pipeline is estimated to be about 470,000 barrels per day. It has a capacity of 520,000 and may be expanded up to 570,000. But it is filling up fast, even with the new capacity added for the line.

That’s because it’s still less than have the nearly 1.2 million barrels taken from the Bakken every day. That record is expected to be hit yet again in 2018 and even surpassed.

For all of the controversy generated by the Dakota Access when it was first constructed, it didn’t take long to be fully at capacity and ready to expand. It, along with the Enbridge Northern pipeline, are the main routes for oil to flow out of the Bakken.

No new pipelines?

There are no new pipelines planned from the Bakken, which still relies heavily on rail transportation. For the region to continue to expand production more pipelines will probably have to be planned. But no new ones are on the drawing boards right now.

Nor are they likely to be. The new tariffs on steel have raised the cost  of pipelines, fittings and valves, putting the future of new projects in doubt. The industry has been begging for an exemption, citing the critical need for new infrastructure particularly in the Bakken as it continues to expand.

It wouldn’t be an issue except for the constantly increasing demand for Bakken oil. Projections call for a continued expansion of production for many years, although at a slower pace than the big boom period.

Expansion of what is in place

As long as they can squeeze a little more capacity out of the pipelines we have there is no immediate crisis. Rail cars can still handle some of the production when they have to. But at some point, as our region continues to grow, this issue will have to be revisited and more pipelines considered.

After so many years of boom and bust, slow and steady growth with a little room to breath is a good thing!

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Schweigert, Klemin & McBride, P.C.
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Bismarck, ND 58501

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