Crude oil pipeline takeaway out of the Williston Basin is much tighter than it appears at first glance. As Bakken oil production continues to grow, effective egress capacity will tighten and reach key thresholds in East Daley Analytics’ Crude Hub Model.
The Bakken barrel has four avenues to reach markets: to the Midwest on North Dakota Pipeline (NDPL), owned by Enbridge (ENB), or on Dakota Access Pipeline (DAPL); south to Guernsey and the Denver-Julesburg Basin via the Pony Express and Saddlehorn pipelines; north to the Canadian Mainline via Enbridge Bakken North Pipeline, or transport by rail.
In the Crude Hub Model, East Daley estimates Bakken shippers have 1,804 Mb/d of total nameplate capacity between these routes out of the Williston. However, we estimate ‘effective capacity’ of only 1,480 Mb/d for the primary routes where incremental production could move. To calculate effective capacity, we revised railing capacity from a 2019 high of 280 Mb/d down to 100 Mb/d. We also adjusted the capacity for Enbridge Bakken North Pipeline from nameplate of 149 Mb/d to only 5 Mb/d of effective capacity.
We believe both rail and the Bakken North line are secondary avenues out of the Williston. Rail has high transportation costs, and moving barrels via Enbridge Bakken North also incurs higher tolls. To use the pipeline, shippers must move Bakken barrels north into ENB’s Canadian Mainline before traveling south to the Midwest, effectively doubling the distance traveled. Moreover, shippers using the Bakken North line must blend the Bakken crude with Mainline volumes, losing any premium for a higher-quality barrel.
Based on this view of effective capacity, we expect Bakken egress to steadily fill over time, from 85% utilization in 2Q24 to 89% utilization by 4Q27 in the Crude Hub Model.
Breaking down these flows by asset, the Crude Hub Model predicts NDPL will reach full capacity by 3Q24, while shippers moving barrels south on pipelines to the DJ Basin via Pony Express and Saddlehorn could run into bottlenecks as soon as 4Q24.
We expect DAPL to be the clear winner for moving new Bakken production. Operated by Energy Transfer (ET), DAPL provides direct market access to the Patoka hub in Illinois and has capacity available to accommodate Bakken growth. EDA forecasts DAPL is currently running at 82% utilization, and we expect throughput to climb to 91% by YE26. – Kristy Oleszek Tickers: ENB, ET.
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