Beginning Monday, U.S. Midwest and Canadian oil producers, refiners, traders and other market observers can benefit from the launch of the first open-market spot price assessments of crude oil from the Bakken Shale formation stretching across central United States and parts of Canada. The Bakken formation is part of the Williston Basin of underground petroleum reserves and one of the most significant new sources of regional crude oil supply for refiners in the United States and Canada.
Platts, a leading global energy information provider, on Monday published spot-market price assessments reflecting the end-of-trading day value of Bakken Blend crude oil injected into pipelines at Clearbrook, Minnesota and Guernsey, Wyoming. Platts' assessments, known as Bakken Blend ex-Clearbrook and Bakken Blend ex-Guernsey, are reported both as a spot price and a differential to West Texas Intermediate (WTI), a similar quality light sweet crude. They are being reported in two fashions in order to provide consumers, producers and the trading community with a fixed price value and a means to compare with a competitive crude oil with similar properties.
"We're excited to play what we believe is a helpful role in the evolution of this new crude oil," said Dave Ernsberger, Platts global director of oil, "and we are pleased to address the industry's call for daily price information derived from an independent, transparent price discovery process."
As of 3:15 p.m. ET Monday, Platts assessed the spot prices of Bakken Blend ex-Clearbrook and Bakken Blend ex-Guernsey at $85.41 per barrel (/b) and $84.76/b, respectively. Expressed as a differential to the calendar month average of WTI futures, as listed by the New York Mercantile Exchange, the prices for Bakken Blend ex-Clearbrook and for Bakken Blend ex-Guernsey were minus $4.15/b and minus $4.80/b, respectively.
The Bakken Blend ex-Clearbrook assessment reflects an American Petroleum Institute (API) gravity ranging from 38-40 degrees and 0.5% sulfur, similar to the characteristics of North Dakota Sweet. API gravity is a measure of how heavy or light a grade of crude oil is compared to water. The Bakken Blend ex-Guernsey assessment represents an API gravity of 38-40 degrees and 0.2% sulfur, similar to the nature of North Dakota Light Sweet.
The Bakken formation spans North and South Dakota, Montana, Saskatchewan, Manitoba and Alberta. Initial government and private estimates put the Bakken formation recoverable reserves at nearly 5.5 billion barrels, with current Bakken crude output about 200,000 barrels per day and rising.
"Many in the industry expect that this high-quality crude will play an increasingly vital role in addressing not only U.S. Midwest and Canadian refining demands, but possibly that of U.S. Gulf Coast refiners, assuming south-bound pipelines come to fruition," said Esa Ramasamy, director of Americas market reporting at Platts.
Platts' Bakken Blend assessments are developed using its Market-on-Close (MOC) methodology, a structured, highly-transparent price assessment process based on the principle that price is a function of time. The MOC process in oil identifies bid, offer and transaction data by company of origin and results in a time-sensitive end-of-trading-day daily price assessment
The assessments are published in numerous Platts publications including Platts Global Alert, a real-time news service; Platts Dispatch, a data delivery service, and the publications Platts Crude Oil Marketwire, North American Crude Wire, and Platts Oilgram Price Report.
Platts, a division of The McGraw-Hill Companies, is a leading global provider of energy and commodities information. With a century of business experience, Platts serves customers across more than 150 countries. An independent provider, Platts serves the oil, natural gas, electricity, emissions, nuclear power, coal, petrochemical, shipping, and metals markets from 17 offices worldwide. Platts' real-time news, pricing, analytical services and conferences help markets operate with transparency and efficiency. Traders, risk managers, analysts, and industry leaders depend upon Platts to help them make better trading and investment decisions.