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Bakken flows on Northern Border dip as Western Canada takes greater share

Highlights

Bakken flows on pipeline have grown for years

Shale still shows potential for resiliency

Bakken natural gas flows onto Northern Border Pipeline are starting to show slight declines, signaling a reverse of the ever-growing gains seen over the last few years, allowing for the possibility of more exports from Western Canada into the US Midwest this summer.

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A slight dip in Bakken production opened space for Western Canada gas exports along Northern Border, but more space is expected to come in the months ahead. Bakken Shale production began declining marginally April 1 to 2 Bcf/d from 2.1 Bcf/d the seven days prior, according to S&P Global Platts Analytics. Sample data for the Williston in North Dakota shows nearly identical swings, to 2.1 Bcf/d from 2.2 Bcf/d.

As a result, the basin sent less gas on Northern Border. Bakken flows on Northern Border fell to just 1.7 Bcf/d April 1 through April 4, the lowest it has been since Feb. 19, when extreme cold caused production curtailments. Norther Border transports gas from Western Canada and the Bakken to markets in the US Upper Midwest.

Platts Analytics expects Bakken production to average 2 Bcf/d throughout April before falling month over month. The summer is expected to average 1.8 Bcf/d and reach as low 1.7 Bcf/d by October. This should continue to weaken Bakken flows along Northern Border, allowing West Canada to utilize more capacity to send a total of 3.7 Bcf/d this summer, an additional 700 MMcf/d over summer 2020.

Bakken's share of Northern Border averaged 1.9 Bcf/d during the first few months of 2020 before the oil price crash which prompted producers to temporarily cap in production. This represented a steady upswing from two years prior when Bakken production reaching the pipeline averaged 1.2 Bcf/d during the first six months of 2018.

Although Bakken output onto Northern Border has started to show dips in recent days, the declines are occurring slower than earlier forecasts by Platts Analytics expected.

This is due in part to a sharp drawdown in drilled but uncompleted wells in the Bakken, as producers kept production largely in pace with historical averages despite a dramatic drop in rigs.

The ample amount of drilled but uncompleted wells still available along with the expectation that recent rig gains will continue and rise to 34 by this time next year, now has Platt Analytics' expecting production in the Bakken might remain strong this summer. The 250 MMcf/d Outrigger gas processing plant will also enter service in the weeks ahead.

At the same time, gas flaring has dropped to about 200 MMcf/d, according to the latest data by the North Dakota Industrial Commission. Flaring averaged as high as 400 MMcf/d just one year prior.