The Bakken and Three Forks Plays in Western North Dakota and Eastern Montana continue to break oil and gas production and rig count records, as shown in the latest director's cut released by the North Dakota Department of Mineral Resources. The continuing conversation with regard to increased production (558,254 barrels per day from 6,726 producing wells in February) is the depressed well-head price for North Dakota Crude. The April 11th sweet crude price at the well-head in North Dakota was $76 per barrel while NYMEX-WTI was selling for 25% higher and Brent selling for 19% higher than WTI. This is a significant spread which allows E&P or midstream companies, who have an aptitude for logistics, to capitalize on the Brent price in the LLS market by using alternate forms of transportation.

Many investors are curious as to what E&P companies they can invest in to be able to capitalize

The rig count in North Dakota has leveled off significantly in the past few weeks, hovering around 205 active drilling rigs. With thousands of more acres to protect and wells to drill, many are asking: "Why has the rising number of rigs stopped?" There are many schools of thought on this matter:

First, older rigs are being replaced with more efficient ones which is accelerating the amount of wells being drilled but holding the rig count flat. What that means is basically older rigs, which turned wells in 45 days, are now being replaced with more efficient rigs which can drill a well in less than 30 days. And, if drilling on a multi-well pad, can simply skid or "walk" to the next location a few hundred feet away, decreasing transport time.

Second, there is a large delay in fracturing services. The number of wells waiting to be fractured

The Bakken Oil Field Discovery in Western North Dakota and Eastern Montana will go down in history as one of the largest discoveries of recoverable oil in history. Even to this day, the full amount of recoverable oil thought to be in the Bakken/Three Forks formations continues to be raised by the USGS and more recently, the oil industry itself.

North Dakota has had legacy vertical oil production since the 1950's so the existence of a source rock is a given. However, the oil saturation and permeability of that source rock is what determines if it can produce economical oil with the new developments in horizontal drilling and hydraulic fracturing. Based on the presence of source rocks underlying every major vertical oil field, we can see the potential for shale plays at those locations. Locations such as the LA Basin in California (Monterey Shale), DJ Basin in Colorado (Niobrara Shale),

In 2010, Whiting Oil and Gas (WLL) drilled exploratory wells in the area of Belfield, ND, just west of Dickinson. These wells were considered "wildcats" or wells drilled a distance away from known horizontal oil production. The sentiment in the industry was that if these wells were economic producers, thousands upon thousands of acres would open up to oil production south of the current exploration area and the game would be significantly changed. Although The Bakken formation was not the target formation in these tests, the Three Forks formation proved to be economically viable. (When people reference the Bakken Oil Field the Three Forks Formation is usually implied). Fast forward to today and there are 6 active drilling rigs in Stark County, ND, with no signs of slowing down.

Soon after thousands of additional acres were opened up, another company, Chesapeake (CHK), decided to come into the play and

TransCanada (TRP) seems to be clinging to an idea they once scoffed at - shipping crude out of the Bakken oil field of North Dakota and Eastern Montana.

TC needs Federal State Department approval because the pipeline will cross the international boundary between the U.S. and Canada. However, if the pipeline does not cross the border, the pipeline only needs approval through the States which it traverses - an arguably much easier process. Initially, the Keystone XL pipeline was touted as a pure oil sands crude pipeline that would bring Canadian crude to the Gulf Coast for refining, which would displace imports of crude from hostile nations. Bakken crude shippers, who are constrained with crude takeaway options, pressured TC and the Governor of Montana to allow an "on ramp" at Baker, MT to include Bakken crude batched in the line originally meant to only carry oil sands crude. TC

I published an article recently outlining pipeline companies pursuing pipeline by rail models due to flexibility and relatively low barrier to entry. Since then, I have received several questions regarding what these opportunities mean for the Railroads' revenues.

BNSF Railway (BRK.A) has the most modern, highest speed, and accessible railroad in the Bakken region. Although others come close, such as the Canadian Pacific Railway (CP) and CP's partner lines, BNSF seems to have the greatest advantage. Not only does crude oil need to get out of developing oil regions, but input commodities, such as sand and steel, need to find its way in to drill out the oilfield. For this article, I will focus on outbound crude oil.

BNSF's vice president of marketing was recently quoted as saying he expects rail to capture at least 25% of the oil produced in the Bakken for the long term.

Recently, the director of the North Dakota Department of Mineral Resources, Lynn Helms, was profiled in an article in the Bismarck Tribune where he appeared to indicate his prediction that the EPA was on track to halt hydraulic fracturing by January. The prediction stems from a non-peer reviewed study by the EPA, which implies fracturing processes risk groundwater contamination. The basis for this conclusion comes from shallow gas wells near Pavilion, WY, which were fracked by Encana (ECA) corporation and may have contributed to acquirer contamination. As you can imagine, Encana is firing back. The North Dakota Department of Mineral Resources issued a press release the very next day, which really didn't retract the prediction, but said that the office does not have the authority to make predictions on what the EPA may or may not do. This article, which was published on a Sunday, made its way

Enbridge (EEP) announced today their plans to increase pipeline capacity for Bakken crude into Berthold, ND by 80,000 barrels per day. What's interesting is that those additional 80,000 barrels per day do not have an outlet via pipeline. This 80,000 barrel inbound capacity will have to be matched by an outbound transportation mode: in this case, the railroad. The BNSF (BRK.A)(BRK.B) Railway serves Berthold, ND and surrounding areas directly. The Canadian Pacific Railway (CP) has its mainline and affiliate line (DMVW) in close proximity as well. Although there is competition, BNSF will be the choice for Enbridge because they are the pro at moving crude by rail.

As we have discussed before, crude by rail is not a new concept. Crude by rail has been going on since the time of Rockefeller. However, it has never been done on a scale of this magnitude. EOG Resources (EOG) was the

Many people wonder how much oil is in The Bakken and if it is a hoax. Many people write about the bright prospects, the novice geology terms, and the companies who are in it. But, many people have it wrong. In this article, I would like to focus on the facts, the oil production potential of the Bakken and what it means for the future of oil production.

The Bakken is not 200,000 square miles as some would have you believe. It is closer to 20,000 square miles. The Three Forks formation, which is similar to the bakken and produces oil, underlies the entire bakken area and then some. Currently, wells are drilled on 640 to 1280 acre spacing units. That translates to 1 spacing unit 1 square mile to 2 square miles long. Initially, to protect the lease on that unit, an oil company will need to hold