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After Hurricane Harvey, Bakken oil in demand

North Dakota Department of Mineral Resources Director Lynn Helms speaks Wednesday, May 25, 2016, at the Williston Basin Petroleum Conference in Bismarck, N.D. Credit: Renae Mitchell Photography

BISMARCK, N.D — Bakken crude and other light, sweet crude oils are in demand in the aftermath of Hurricane Harvey, a North Dakota official said Friday, Sept. 15.

After the hurricane, analysts are seeing a $4 to $5 premium for each barrel of Bakken crude over West Texas Intermediate oil at Clearbrook, Minn., said Justin Kringstad, director of the North Dakota Pipeline Authority.

"The refiners are finding value in running these light, sweet crude barrels," Kringstad said. "They're easier to process and they have a higher yield of the products that have been in demand since the storm, gasolines and diesel fuels."

Kringstad said he'll continue to monitor whether the price shifts will affect the state's oil transportation trends. The price for a barrel of WTI was $49.90 on Friday afternoon, according to Bloomberg.

North Dakota oil production increased 1.4 percent in July to an average of nearly 1.05 million barrels per day, the Department of Mineral Resources said Friday.

Natural gas production increased 1.35 percent to an average of nearly 1.88 billion cubic feet per day, according to the preliminary figures.

"Not huge jumps, but very positive," said Director Lynn Helms.

Seventy-six percent of oil was transported by pipeline in July and 10 percent transported by rail, Kringstad said. Oil production and transportation figures are released two months later.

With more barrels being transported by pipeline with the addition of the Dakota Access Pipeline, Kringstad estimates about 100,000 barrels to 130,000 barrels a day leave the state by rail. That's equivalent to a little more than one train a day on average, Kringstad said.

North Dakota's oil industry has been challenged this year to recruit enough qualified workers, but the state now has 24 hydraulic fracturing crews, Helms said.

"That should be enough personnel to keep up with our current rig count," he said.

An estimated 889 wells had been drilled but were waiting on hydraulic fracturing crews at the end of July, an increase of 34 from the previous month.

The state had 56 drilling rigs operating on Friday, compared with 34 at this time last year and 71 at this time two years ago.

North Dakota had 13,981 producing oil and gas wells in July, a new record for the state.

The state's natural gas plants also set a record in July, processing 180,000 barrels per day of natural gas liquids that month, Kringstad said.

The percentage of natural gas flared in July remained at 12 percent, the same as the previous month.

'Stunning' investment

Helms said he was recently asked how much money the oil industry has invested in North Dakota and came up with a "stunning" figure: $125 billion invested from 2007 through the middle of 2017.

Helms, who presented that figure to a Williston oil industry group recently, said his estimate includes the dollars spent on drilling and completing oil wells, natural gas gathering and processing, the Dakota Access Pipeline and other pipeline expansions.

The estimate does not include dollars invested to build housing, roads, power lines or other infrastructure to support the growing oil industry, he said.

"It's a pretty stunning number when you think about the investors around the world and the industry being willing to spend that kind of money here in the state," Helms said.