By BEN LEFEBVRE
Oneok could revive its cancelled Bakken Oil Express project if producers can agree on a new destination point for the proposed 200,000-bpd pipeline, the company's chief executive said Thursday.
Oil production in the Bakken shale formation in North Dakota reached a record high of 728,000 bpd in September, according to the latest data from the North Dakota Department of Mineral Resources.
Refiners in the Gulf Coast and East Coast have depended on trains to acquire much of that oil, however, because not enough pipelines exist in the Bakken region to transport all the oil produced.
Oneok cancelled its Bakken Oil Express plans Tuesday, citing insufficient shipper interest. But CEO John Gibson referred to the project as 'postponed' at an investors conference Thursday and said the problem was that shippers were not interested in sending oil to the pipeline's proposed destination at the oil storage hub of Cushing, Okla., currently the site of a supply glut that has helped keep US benchmark oil prices low.
About 45.9 million bbl of oil were storied in Cushing during the fourth week of November, up nearly 50% from the year before, according to the US Energy Information Administration.
The glut, brought about by a technology-driven oil production boom, has kept US benchmark oil prices about $20 cheaper than European benchmark Brent.
"Producers need to decide where they ultimately want their crude oil to end up," Mr. Gibson said at the conference. "We still believe that the efficiency and reliability of pipelines will provide the most efficient solution" for transporting crude oil from the Bakken shale formation.
Dow Jones Newswires