In the wake of capacity constraints of pipelines in the Bakken
play, Norwegian operator
) announced the transport of Bakken crude from North Dakota to
market by rail.
SCHLUMBERGER LT (SLB): Free Stock Analysis
STATOIL ASA-ADR (STO): Free Stock Analysis
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The constantly growing yield from the Bakken and Three Forks plays
of North Dakota has put a lot of pressure on existing pipeline
capacity. The output, which is expected to increase to 1 million
barrels per day (bpd) from its current output of 600,000 bpd over
the next three to five years, will further face transportation
With a target to ease these bottlenecks, Statoil proposes to
commence shipments by rail starting in September. It has leased an
additional 1,000 tank cars for the existing arrangement that will
facilitate the access to markets on the East, West and Gulf Coasts
of the US, as well as Canada.
Each train having a length of about two kilometers and having 100
cars is expected to take up a transit time of around 14-15 days
round-trip, including loading and unloading. Together, all 1,000
cars are capable of offering a transport capacity equal to a North
Sea shuttle tanker.
Statoil's efforts to overcome the transport bottlenecks will also
aid the company's future growth as it plans to enhance production
in the area to 100,000 bpd in the next three to five years from the
current level of 26,000 to 60,000 bpd. By 2020, Statoil intends to
triple its North American oil and gas output to 500,000 barrels of
oil equivalent per day.
Consistent with its strategy of augmenting its position in the
North American unconventional arena, Statoil acquired net acreage
of over 375,000 in the Bakken and Three Forks by purchasing Brigham
Exploration last year.
The move to use rail-based exports is likely to result in savings
of millions of dollars for the company and also boost its profit
margin, as Statoil grows its acreage in North America.
Statoil, which recently hired
) for electric wireline logging services on the Norwegian
Continental Shelf, holds a Zacks #3 Rank (short-term Hold rating).
Longer term, we maintain our Neutral recommendation.