Bakken Price and Fundamentals

Updated April 1, 2024

Bakken crude price differentials and production have been relatively stable over the past 12 months. However, an increase in gas production and the lack of gas takeaway capacity is an emerging threat to Bakken crude production.

Recent News:

• (February 22, 2024) - Chord Energy's acquisition of Enerplus for $3.8 billion, forming the Bakken Shale's biggest producer, will boost its output to 287 MBoe/d and create an $11 billion enterprise with nearly 1800 undeveloped locations breaking even at $60/Bbl oil prices

• (January 19, 2024) - Bakken oil production in North Dakota grew last year, pushing total output to 1.3 MMBbl/d, driven by a surge in drilling rigs and the use of drilled but uncompleted wells (DUCs) from 2019
  • Enverus increased its annual forecast for US oil production growth to 1.2 MMBbl/d due to the Bakken's performance, although they do not expect this growth trend to continue, citing current rig counts
  • While oil production may face challenges in sustaining growth, natural gas production in the Bakken is on the rise, testing the limits of existing pipeline and processing capacity and prompting concerns over takeaway capacity 
• (June 21, 2023, NGI) - Bakken Shale oil producers, enduring low natural gas prices, may find respite as projects to increase basin takeaway capacity advance. Key projects include Kinder Morgan Inc. and TC Energy Corp.'s plan for 430,000 Dth/d of natural gas transport capacity from the Bakken Shale, aiming for a 2026 start, and WBI Energy Inc.'s Grasslands South Expansion Project, due later this year. Despite low prices, North Dakota saw a 2% month-on-month gas production increase and a 1% oil production rise in April.

• (February 3, 2023, Argus) - The Army Corps is expected to release a long-anticipated environmental review of the Dakota Access Pipeline (DAPL) this spring. Opponents of the pipeline were in a battle in the courts even before the DAPL's commissioning in 2017. After the Army Corp EIS study is complete, a 45-day public comment period ensues. The final version of the EIS will lead to a record of the decision on the easement from the Army Corps, which could have consequences for the pipeline, according to the Harvard Law School's Environmental and Energy Law Program (EELP).

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Last update: 4/1/2024

June 28, 2024 - Oil prices in the Bakken have continued to trade at a discount to WTI since November 2023. Since differentials fell to a discount, prices have been relatively stable between $-3.75 and $-2.65/Bbl. However, it is important to note that liquidity in Clearbrook forwards is extremely thin, leading to significantly wider than average bid-ask spreads. Many producers in the region opt to hedge physically rather than financially for this reason. 

Geology The Williston Basin, compared to many basins worldwide, is a structurally simple basin. It is roughly circular, deepest in its center, and the strata become both shallower and thinner towards its margins. It is a large basin, covering approximately 150,000 square miles over parts of North Dakota, South Dakota, Montana, and parts of the adjacent Canadian provinces of Saskatchewan and Manitoba. The basin's deepest point is thought to be near Williston, ND, where the Precambrian surface is more than 16,000 feet below the surface. Crude Most of the crude oil reserves in the Bakken/Three Forks is a high-quality light sweet crude with an average API gravity of around 40. These traits make it very similar to West Texas Intermediate crude that is used for the NYMEX benchmark contract. Source: dmr.nd.gov, NGI

Source: Baker Hughes

Major Pipelines

Dakota Access Pipeline - The Dakota Access Pipeline (DAPL) is a 1,172-mile-long underground pipeline that can transport up to 750 MBbl/d of light sweet crude oil. The pipe originates in North Dakota in the Bakken formation and terminates in Patoka, Illinois. A separate Energy Transfer pipeline (ETCO) can then deliver oil to the Nederland terminal on the Texas Gulf Coast.