NEW YORK May 9 Shipping crude oil by rail has
alleviated capacity constraints in the oil-rich Bakken shale in
North Dakota, the chairman and chief executive of Continental
Resources said on Thursday.
"What rail has done up here is basically eliminated the
overall capacity constraints," Harold Hamm said during a
first-quarter earnings conference call with analysts. "That's
been the great thing about it, if you ship everything you
The company drills for oil in the Bakken shale, a deep
horizontal rock formation with oil trapped between the layers,
in North Dakota, a state that has become the No. 2 U.S. oil
producer behind Texas.
Continental's Bakken production rose 60 percent above
first-quarter 2012, it said in its first-quarter 2013 earnings
The company is moving toward using the price of North Sea
Brent crude oil, the global benchmark, to hedge, or offset, its
production, as U.S. crude makes its way to coastal refineries,
executives said on Thursday.
The spread, or price differential, between West Texas
Intermediate, the current U.S. benchmark crude, and Brent is closely watched by the market, for one, as a
barometer of U.S. supply availability.
On Wednesday, the spread between the two narrowed to its
lowest point in more than two years as expectations for further
pipeline build outs were expected to bring more U.S. oil to
Crude production in North Dakota hit a record in February
but is expected to accelerate further this month, the state's
Department of Mineral Resources said in April.
As Bakken production continues to ramp up, it will shift the
U.S. benchmark, another Continental executive said.
"Sometime this summer or third quarter Bakken total basin
production will exceed the entire 40s Brent basket in terms of
volume of production," said Rick Bott, president and chief
operating officer during the call.
"...Essentially Bakken total production will reach a
million, million and a half barrels a day from the basin and it
will be the North American benchmark," Bott said.