Despite the massive economic growth of Montana oil in the first decade of the 21st Century, Big Sky Country still faces the issue of market access. The project creates a $140 million onramp in Baker, where capacity for 100,000 bpd Bakken crude could be sent from Montana to the proposed Keystone XL route.
By Taylor Rose | February 17, 2015
The 1,700-mile Keystone XL pipeline would link Alberta to southern U.S. refineries and ports. Source: TransCanada
Oil was first discovered in Montana in 1864 near the Big Horn River by a wagon train moving over exposed crude and ever since then Montana has come to be known as an oil producing state. Montana’s first big oil boom occurred in the 1920s when large reserves were found in the Kevin-Sunburst oil field in Toole County and then later in the Cut Bank field in north-central Montana. It is also worth noting that Kevin-Sunburst produced the most oil for the allied effort during the Second World War. However, it is the Williston Basin in far eastern Montana that has the greatest acclaim and relevance today.
Ralph Arnold, a petroleum geologist observed that “Montana is one of the new oil states….the total area of Montana, 146,131 square miles. Sixty-eight percent is underlain by rocks, possibly oil bearing. With the exception of Texas and Colorado, Montana contains a great area of possible oil bearing rocks than any other state in the Union.”
Though not exactly at the top, Montana is still an oil power-player for the United States. The now infamous Williston basin in 2014 was producing more than one million barrels per day (bpd) in both North Dakota and Montana. The basin is so large in Montana that it covers 10 counties in the eastern part of the state.
Despite the massive economic growth of Montana oil in the first decade of the 21st Century, Big Sky Country still faces the issue of market access. Former Democrat Governor Brian Schweitzer negotiated an important pipeline expansion plan with TransCanada to build a pipeline that would run though northeastern Montana and travel down to Gulf Coast refineries.
The project creates a $140 million onramp in Baker, where capacity for 100,000 bpd Bakken crude could be sent from Montana to the proposed Keystone XL route.
Though the U.S. House of Representatives has repeatedly passed legislation to create the Keystone XL Pipeline and the U.S. Senate has recently followed suit, Governor Schweitzer lamented the Keystone delay two years ago saying:
“Ninety per cent of these jackasses that are complaining about the Keystone pipeline in Washington, D.C., one year ago wouldn’t have even known where the Keystone was. While we were doing the heavy lifting here in Montana and in South Dakota and in Kansas and Oklahoma … in Washington, D.C. … all these great defenders had never heard of Keystone before.”
Helena-based natural resources expert and spokeswoman for the Montana Petroleum Association, Jessica Sena, says the northeast pipeline expansion plan and the Keystone XL “will be a large property taxpayer and employer in all states it crosses, with the most recent analysis estimating 12 thousand jobs in western states alone and 42,000 total.”
One of the great puzzling questions that baffles Montanans is “why can’t we drill more?” After all, she points out, “We produce in a year [last year] what North Dakota produces in a month.”
Sena explains, “Montana is twelfth in terms of national production and it really has to do with the amount of reserves Montana has….it is really a question of geology… as “the thickest portion of the Bakken lies in North Dakota.” She further clarifies saying “the Bakken is extremely shallow once you get into Montana.” It is really difficult for producers to get the same results in Montana that they can in North Dakota.”
According to Fox News “The Bakken encompasses some 25,000 square miles in North Dakota, Montana, Saskatchewan and Manitoba. About two-thirds of the acreage is in western North Dakota,” giving North Dakota the overwhelming majority of the access to extraction.
The problem of increasing production output in Montana is limited by “land use limitations that have hampered exploration and production.” Furthermore she adds that “most of this boom has occurred thanks to the private sector…and the development on private land.”
Montana could expand its ability to produce more petroleum if “Government incentivized companies to innovate and explore new ways and opportunities to increase exploration and production.”
However, the harsh reality is a coming peak in Montana due to the geological limitations.
Taylor Rose is a graduate of Liberty University with a B.A. in International Relations from the Helms School of Government. Fluent in English and German he has worked and studied throughout Europe specializing in American and European politics. He is a prolific writer and author of the book Return of the Right an analysis on the revival of Conservatism in the United States and Europe. He is also a contributor to SFPPR News & Analysis.