The world's first price assessments valuing crude oil produced from the Bakken Shale formation in the central United States will be published by Platts beginning May 3, 2010.
"Thanks to favorable economics and advances in technology, production from this unconventional crude oil source has risen dramatically in recent years," said Esa Ramasamy, director of Americas market reporting at Platts. "This new high-quality crude oil stream is expected to help meet Midwest refining demand and potentially that of the U.S. Gulf Coast. Because of its importance, the industry needs a means of placing a value on this crude. Our new price assessments address this need by providing a transparent price discovery process and daily pricing information."
Only recent technological advances in horizontal and deep drilling have opened the Bakken field to economically recoverable production since its first oil extractions in 1951. The estimated recoverable reserves of crude oil from Bakken shale exceed the proven crude reserves of Ecuador, a consistent exporter of crude oil to Latin America, the U.S. West Coast, and Asia. According to the U.S. Geological Service, the Bakken formation is the largest oil accumulation in the Lower 48 U.S. states, with estimated recoverable reserves of at least 4 billion barrels. Additionally, north of the border in Canada, there is an estimated 1.3 billion barrels of recoverable reserves. The Bakken formation is part of the Williston Basin of underground petroleum reserves, which spans North and South Dakota, Montana, Saskatchewan, Manitoba and Alberta.
Platts reports that current Bakken crude output is about 200,000 barrels per day (b/d) and the North Dakota Pipeline Authority estimates that the field's yield could rise quickly to between 400,000 b/d to 500,000 b/d over the next 10 years before tapering off.
Platts' two Bakken Blend assessments will help capture U.S. Midwest refining economics for the Rocky Mountain and Canadian crude production areas, which are growing in importance. The new daily spot assessments will provide an end-of-trading-day value of Bakken Blend crude injected into pipelines at Clearbrook, Minnesota, and Guernsey, Wyoming. The assessments will be published as a spot price and also as a differential to West Texas Intermediate crude oil.
The Bakken Blend ex-Clearbrook assessment will reflect an American Petroleum Institute (API) gravity ranging from 38-40 degrees and 0.5% sulfur, similar to the characteristics of North Dakota Sweet. API gravity is a measure of how heavy or light a grade of crude oil is compared to water.
The Bakken Blend ex-Guernsey assessment will represent an API gravity of 38-40 degrees and 0.2% sulfur, similar to the nature of North Dakota Light Sweet.
"Platts has more than 100 years' experience assessing physical commodity prices and bringing transparency to the markets through our price assessment processes," said David Ernsberger, global director of oil. "We have been in the forefront of oil price discovery in the U.S. since 1909, and our decision to begin publishing an open-market value of this significant new source of high-quality North American crude is another example of our contributions to the industry and the marketplace."
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