Oddly, the recent spike in US oil production from the Bakken fields of North Dakota and Montana has coincided with an increase in demand for oil products: in short, more oil is needed to fuel the oil boom.
Local demand for diesel fuel for trucks and trains has sharply risen as transportation becomes an important part of the infrastructure for the companies drilling for crude oil in the region. This means that medium-sized distilleries which turn crude product into usable fuel have experienced an 80% increase in demand between 2009 to 2012, a jump too large for them to handle. Many companies are instead turning to smaller, local refineries to meet the rising need.
Two such refineries, one a joint project from MDU Resources Group and Calumet Specialty Products Partners while another from Dakota Oil Processing, are planned as the first greenfield refineries built in the United States since 1970. Some are expected to open as early as next year.
James Mann, Stag Energy notes that North Dakota should take steps to ensure that safety standards are being met regardless of how frantic demand and production become. A recent explosion at an oil patch killed one worker and wounded another in Mountrail County in North Dakota.
The oil boom has also boosted the demand for naphtha, a diluent used by transport companies when shipping the crude oil. Experts note that if the planned Keystone XL project is approved, that will only increase the demand for diluents due to the increased crude production from Canada’s oil sands — possibly an increase as much as by a factor of ten.
A bipartisan vote on March 22nd revealed widespread government support for the Keystone pipeline, designed to carry Canadian crude to refineries in Texas. The construction would lead to thousands of new jobs and help meet rising energy demands, but the project has been met is stiff opposition from environmental groups. The route of the pipeline has been changed in order to protect sensitive areas in Nebraska, and multiple independent commissions have found the new pipeline plans to have minimal environmental impact.
In addition to the energy sector, the oil boom and subsequent jumps in demand are proving to have positive economic impact on other major sectors of the state economy. 40 new hotels were built last year, primarily around the oil fields, and the attention is helping the state attract more tourists, a surprisingly important part of North Dakota’s economy.
James Mann, Stag Energy is a recognized leader in the energy industry. His company provides a wide range of services to clients, including: construction, training, servicing, equipment rental and consulting. His former clients include Apache and Halliburton.