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Soaring North Dakota Oil Production Triggers Infrastructure Upgrades

Booming production of crude oil in North Dakota is necessitating significant upgrades in transportation infrastructure in the state.

Oil output in the state has skyrocketed from practically nil within the last three years to 450,000 barrels per day, making North Dakota the fourth largest oil producer in the United States, according to The Wall Street Journal.

MarketWatch reports that oil production is rising so fast that around 25 percent of it is now being transported by rail, according to BNSF Railway. This spike has forced already-existing pipelines to operate at capacity, and more lines are not expected to be available until 2013, The Wall Street Journal reports.

Exploration and production companies are adapting to this situation by constructing rail terminals, which can be set up without a large investment of time, according to the media outlet. The amount of oil that can be transported by these rails is expected to double in 2012 to 700,000 barrels a day.

Focusing on railroads as a means of transporting crude means that capacity might grow too rapidly and leave the companies with idle resources they can't use, according to the media outlet. The companies that are investing their resources are betting that demand for this means of transportation will be sustained.
 



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