Plains All American Pipeline, L.P. (PAA), Enbridge Energy Partners, L.P. (EEP): Is the Bakken Turning Sour?

Page 1 of 2

Enbridge Energy Partners, L.P. (NYSE:EEP) has been in a bit of a battle with Plains All American Pipeline, L.P. (NYSE:PAA) over the levels of hydrogen sulfide that’s in the crude oil being delivered to its rail facility in the Bakken. The company is seeking to reject crude oil that contains more than five parts per million of the potentially deadly gas. This is after the company found extremely high concentrations of the gas in one of its crude oil tanks in North Dakota. The level of hydrogen sulfate hit 1200 parts per million which is a very potentially dangerous level.

Enbridge Energy Partners, L.P. (NYSE:EEP)’s proposal to reject crude with higher levels of the gas has not only caused it to fight against Plains All American Pipeline, L.P. (NYSE:PAA), but it’s not made producers like Marathon Oil Corporation (NYSE:MRO) and Hess Corp. (NYSE:HES) happy either. Those two companies, as well as other Bakken operators, could be forced to shut down oil and gas production until a new form of transportation can be secured. Both companies, along with Plains All American Pipeline, L.P. (NYSE:PAA), have filed with FERC to slow down the pace of Enbridge Energy Partners, L.P. (NYSE:EEP)’s plans to reject oil with high concentrations of hydrogen sulfide.

You can’t blame Enbridge Energy Partners, L.P. (NYSE:EEP) for wanting to protect its employees from potential exposure to the deadly fumes. What’s interesting though is that this dispute could be pointing to a bigger issue with the Bakken. One of the reasons why the oil flowing out of the Bakken has been so highly prized is because it’s known to contain low levels of sulphur. This sweet crude oil is easier to refine than heavier, sour crude.

Source: Marathon Oil

Finding elevated levels of hydrogen sulfide could mean that some areas of the play are more sour or it could mean that play is becoming sour. According to the Society of Petroleum Engineers, some of the reservoirs from the Bakken formations have been observed as souring. There are several potential causes including fracturing, underground mineral migration, and bacterial action.

What might happen in the future is that companies operating wells with more sour oil and gas could be forced to install separation equipment. This equipment would add to the cost, but it would remove the hydrogen sulfide. Another option would be to send the oil and gas on a dedicated pipeline to a treatment plant. While both options would add to the cost of production, if the Bakken proves to be souring, oil and gas companies like Hess Corp. (NYSE:HES) and Marathon Oil Corporation (NYSE:MRO) might need to explore these options in order to continue producing.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!