1 Issue Oil Companies in the Bakken Have Put Off Could Bite Back This Year

With so much oil being moved out of North Dakota by train, railroad lines need major upgrades to handle the congestion.

Tyler Crowe
Tyler Crowe
Apr 14, 2014 at 10:06AM
Energy, Materials, and Utilities

North Dakota's booming energy business has been driven the use of rail transport. Today, over 61% of oil production from the region leaves on a railcar, and several producers, such as Continental Resources (NYSE:CLR) and Oasis Petroleum (NYSE:OAS)-- both of which ship over 80% of their production via rail -- have enjoyed price premiums for oil moving to East and West Coast refiners. Problem is, though, many of the rail lines in the region weren't built to handle this kind of capacity. This is leading to some major bottlenecks.

To fix this problem, the major rail companies in the region will start doing huge capacity upgrades. Unfortunately, it could lead to even bigger slowdowns in the near-term future. Find out what this could mean for oil producers in the region and why investors should be aware of this situation by tuning into the video below.