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BLOCKBUSTER BAKKEN DEAL MAY PUT A BIT MORE OIL IN TRADERS’ HANDS

Reuters NEW YORK – A $6 billion takeover to create the biggest oil producer in the Bakken shale may also open up new opportunities for some big traders who ship oil from North Dakota and Montana to market.

Over the weekend, Whiting Petroleum Corp said it would acquire Kodiak Oil & Gas Corp, creating a company that pumped some 107,000 barrels per day (bpd) in the first quarter, or about one in every 10 barrels of Bakken crude.

Like most producers in the Bakken, neither firm delivers its crude directly to a refiner’s front gate, relying instead on logistics or trading companies with access to pipelines, oil terminals or rail cars to buy the crude near the wellhead and transport it hundreds or thousands of miles.

Whiting has preferred to sell its over 75,000 bpd of oil production to middlemen who can then ship the crude to the highest-priced market, with Plains Marketing LP, Shell Trading and privately held Dallas-based Bridger Trading among its biggest buyers, according to its filings with the U.S. Securities and Exchange Commission.

Kodiak also sells its over 30,000 bpd of oil output at the wellhead, but most often to refiners such as Tesoro Corp , which owns a refinery in North Dakota and another in Washington state, and Valero, which take it directly to their plants, according to a person familiar with the company’s sales. Both refiners declined to comment on their suppliers.

With the deal, Kodiak’s relatively small slice of Bakken may now be able to reach a wider variety of buyers, according to the person. That may also reduce its exposure to the volatile price discounts that arise in the region due to a lack of adequate access to pipelines, the cheapest form of transport. Read More in The Fargo Forum.