The Enid News and Eagle, Enid, OK

Agriculture and Energy

Related Photos

  • A Continental Resources drilling rig lights up the night sky in North Dakota. Continental has become the largest player in the Bakken oil play in North Dakota and Montana and hopes to find a way of piping the product south. (Photo provided)

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  • Local oilman Harold Hamm stands in his 15th floor office in Continental Towers North. (Staff Photo by SHAWN YORKS) Local oilman Harold Hamm stands in his 15th floor office in Continental Towers North. (Staff Photo by SHAWN YORKS)

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Discussion

April 11, 2010

Piping up: Hamm commends Montana governor for on-ramp stance

By Jeff Mullin, Senior Writer Enid News and Eagle

ENID — In the fourth quarter of 2009, Continental Resources saw a 29 percent increase in initial production rates for its oil wells in the Bakken play in North Dakota.

Overall, oil production was up nearly 30 percent, or 15 million barrels, in North Dakota throughout the first 10 months of 2009. North Dakota produces some 250,000 barrels of crude per day.

Getting the oil out of the ground is one thing, getting it to the refinery is another.

A Canada-to-Texas oil pipeline proposed by Canadian firm TransCanada by-passes the Bakken region of Montana and North Dakota, the top crude oil area in the continental U.S., according to U.S. Geological Survey.

But oil producers and political leaders in Montana and North Dakota called on TransCanada to allow an “on-ramp” for Bakken oil. The pipeline is proposed to carry crude oil from Canadian tar sands fields to the Gulf of Mexico.

Earlier this year, Montana Gov. Brian Schweitzer called for such an on-ramp, drawing praise from Harold Hamm, chairman and chief executive officer of Enid-based Continental Resources.

“His letter to the Montana Public Service Commission serves notice that any pipeline coming across Montana should protect the interests of Montanans ... and that the Canadian tar sands pipeline project should not be allowed to proceed as a detriment of jobs, royalty payments and tax revenues in Montana,” Hamm said.

Because of the lack of pipeline access, producers in the Montana-North Dakota region have been getting a lower price for their crude because of the increased cost of transportation.

Hamm said the price differential in the Montana-North Dakota region had been as much as $25 a barrel and could go higher if U.S. crude is supplanted by tar sands oil.

“This situation is not a maybe,” Hamm said. “It’s been going on 3-4 years. It is impacting U.S. regional crude oil markets from Montana to Illinois to Oklahoma.”

Lynn Helms, director of North Dakota’s oil and gas division, projects crude production in his state could hit 300,000 to 400,000 barrels per day and contain that level for 10 to 15 years.

“If you’ve got that much more oil coming on, you’ve got to have somewhere for it to go,” Hamm said. “Montana had a real claim that if they (TransCanada) are going to come across the state, they ought to act as a common carrier pipeline. If not, they don’t need to come across the state.”

Montana’s public service commission voted 5-0 to prohibit TransCanada from building its pipeline across that state unless it permitted the on-ramp.

Last month, TransCanada executives said they will consider allowing such an on-ramp for Montana and North Dakota crude.

Robert Jones, TransCanada vice president, said the Keystone XL pipeline was “open for business” to U.S. producers.

“It looks like the position (of TransCanada) has shifted — from ‘no way” to ‘sure, we’ll consider it,” said Schweitzer.

“Suddenly they have changed their mind 180 degrees,” Hamm said. “I think a few people being involved kind of changed the world there.”

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