Imperial Oil

    By Paul Vieira

    “Bakken” is starting to become a dirty word in Calgary.

    Producers are boosting output in the tight-oil play in North Dakota. But a lack of pipeline capacity to markets has sent prices of Midwest crudes—and Canadian ones—falling. And the light, sweet oil from the Bakken competes directly with the synthetic crude that many oil-sands producers make.

    Now, in the eyes of a Canadian credit-rating agency, anyway, the Bakken Shale represents a better bet for investors, compared to the Alberta oil sands. Analysts at DBRS of Toronto decided to compare the two, big North American oil-producing regions that are reshaping the North American and global energy markets.

    In its report, DBRS found putting money into the Bakken was considered a “lower risk” investment, estimating the region has an advantage over the Canadian oil sands of roughly $20 per barrel.

    “The Bakken region beneﬁts from its higher quality (light oil) product, lower rail costs with access to Brent pricing and a much faster payback period,” the DBRS analysts said. “These advantages enable the Bakken region to better withstand oil price volatility.”

    A big issue for both regions is how to move the oil to market, as constraints mount in pipeline infrastructure. The current infrastructure was built at a time when oil in North America mostly came from the south to the north.

    But the Bakken and the oil sands has now created a backlog at the Cushing, Okla., hub, resulting in significant oil-pricing differentials.