North Dakota Oil Output May Double by Mid-2017-State Official

"I don't expect that to happen, but I do expect one or more of these risk factors to impact our ultimate peak production," he said.

He said U.S. oil refineries only have an additional 650,000 bpd in capacity to take light sweet crude beyond the amounts they are processing now.

But that could change as the domestic market gets flooded with light sweet oil produced not just from Bakken but also the Permian Basin and Eagle Ford formation in Texas and New Mexico.

"As refiners get a taste for light sweet crude oil, we think there'll be some switching back to light sweet from heavy sour but there's going to be some price turbulence involved in all of that," he said.

In recent years refiners spent billions of dollars refitting their plants to be able to process more heavy sour crude because those grades tends to be cheaper and in anticipation of more supplies from Canadian tar sands via the Keystone XL pipeline.

But in the five years that TransCanada's Keystone XL pipeline project has been stalled by environmental protests and pending U.S. government approval, production of light sweet crude in the United States has soared.

In an indication that it recognizes this trend, the country's largest independent refiner, Valero Energy Corp , said this week it would raise the capacity to process light crude oil at its U.S. Gulf Coast refineries.


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