News Releases for April 2006
April 20, 2006
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Hoeven, Schweitzer, Freudenthal Address Pipeline Bottleneck
BISMARCK, N.D. – Gov. John Hoeven met Wednesday in Billings with Montana Gov. Brian Schweitzer and Wyoming Gov. Dave Freudenthal, along with oil industry officials from both the U.S. and Canada, to build a cooperative approach to resolving the oil pipeline bottleneck in the region. Representatives of the Canadian oil industry were also present.
The Midwestern, Rocky Mountain pipeline system is an integrated network of pipelines that move crude oil from points in North Dakota, Montana, Wyoming and Alberta, Canada. Discounts on a barrel of crude oil shipped from the Williston Basin range from $8 to $25 because of competition for pipeline space, which is about 15,000 barrels a day short of needed capacity.
In the short-term, Hoeven has already worked with industry officials to get an additional 18,000 barrels a day online by about July 1, and an additional 30,000 barrels a day online by the end of the year. Steps agreed upon by the officials in Billings are part of Hoeven’s continuing effort to expand capacity over the long-term.
“This is about building an integrated system in North America that serves all of us – consumers and producers – at a time when it’s critical for our nation to establish greater energy independence,” Hoeven said. “We need to create an environment where the private sector steps up to make the investments necessary to move more product to market, creating a more stable, more secure oil production industry right here at home.”
Joining Hoeven at the meeting were Lynn Helms, director of the N.D. Department of Mineral Resources; Ron Ness, executive director of the N.D. Petroleum Association; Robert Harms, president of the Northern Alliance of Independent Producers; and Bob Mau, owner and president of Eagle Operating of Williston, N.D. and chairman of the North Dakota Petroleum Council.
During the course of the meeting public officials and industry representatives from the three states and Alberta, Canada outlined steps currently underway to expand pipeline capacity, and agreed to collaborate on additional steps to enhance capacity in both short-term and long-term. Specific measures the governors agreed to pursue include the following:
- Gov. Freudenthal, in his capacity as chairman of the Interstate Oil and Gas Compact Commission (IOGCC), will establish a regional task force to analyze current discounting and to coordinate a multi-state approach to pipeline expansion. The IOGCC is a multi-state government agency that promotes the conservation and efficient recovery of domestic oil and natural gas resources while protecting health, safety and the environment. The province of Alberta, Canada, is an international associate of the IOGCC.
- Gov. Hoeven will coordinate a joint letter on behalf of the governors urging the Federal Energy Regulatory Commission to expedite regulatory approval for pipeline enhancements in the multi-state region.
- The governors will work collectively to enlist producers to sign up for new pipeline capacity, and thereby encourage new investment.
North Dakota and western Montana currently produce about 200,000 barrels of crude oil per day, according to Hoeven. In addition, there are about 35 drilling rigs in North Dakota and 30 in Montana to further expand production. Shipments are restricted, however, because existing pipeline capacity can’t accommodate increased production.
Enbridge, a principal pipeline, can accommodate 85,000 barrels a day, and the Tesoro refinery can take 55,000 barrels a day. Of the remaining 60,000 barrels a day, the Guernsey, Wyoming market, which serves Colorado refineries, can take only about 45,000 barrels a day because one of several primary refineries in Colorado is operating at a reduced capacity while the company upgrades its facilities. That leaves about 15,000 barrels a day that can’t be moved.
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