Bakken Oil Output Shows Signs of Slowing as Pipeline Flows Slip

Oil output from the Bakken, the second-largest US shale field, is showing signs of a slowdown, as evidenced by declining flows on the Dakota Access Pipeline (DAPL). DAPL volumes dropped to 542,000 barrels per day (b/d) in August from 566,000 b/d in July and a January high of 588,000 b/d, with preliminary September figures showing further declines. This trend, occurring despite the pipeline's 750,000 b/d capacity, signals potential headwinds for US crude production.

Analysis

Oil output from the Bakken shale, the second-largest US shale formation, is exhibiting clear signs of a slowdown, a potentially material development for domestic supply. The primary evidence is a consistent decline in crude flows on the Dakota Access Pipeline (DAPL), which fell from a high of 588,000 barrels per day (b/d) in January to 542,000 b/d in August. According to data from Wood Mackenzie, this downtrend has extended into September with preliminary volumes slipping further. This decline is particularly notable given the pipeline's total nameplate capacity of 750,000 b/d, indicating significant underutilization and reinforcing the signal of weakening regional production. As a key contributor to national output, a contraction in the Bakken could signal broader headwinds for US crude production growth.

Key Decisions for Investors

• Investors should monitor this trend as a potential bullish catalyst for WTI crude prices, as a sustained decline in Bakken output would tighten US domestic supply.
• It may be prudent to review exposure to midstream companies with significant reliance on the Dakota Access Pipeline and the Bakken region, as declining volumes directly impact their throughput revenue.
• Consider this data point a leading indicator to scrutinize the upcoming production guidance and capital expenditure plans of exploration and production companies operating primarily in the Bakken shale.