Billionaire Buffett's Bakken Boom

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Billionaire Buffett's Bakken Boom

 Posted 07:02 PM ET

Energy Policy: Killing the Keystone XL pipeline may help one of the world's richest men get richer. North Dakota's booming oil fields will now grow more dependent on a railroad the president's economic guru just bought.

Stop us if you see a pattern here. About the time George Soros — Hungarian billionaire and key donor to leftist groups and the Democratic Party — invested heavily in the stock of the state-run Brazilian oil company Petrobras, President Obama was curbing U.S. offshore oil production and the U.S. Export-Import Bank announced a $2 billion loan to Petrobras to finance deep-water drilling off the pristine beaches of Sao Paulo and Rio de Janeiro.

As he was imposing curbs and moratoria on U.S. offshore drillers, President Obama wished the Brazilians well in the hope we would someday be Brazil's best oil customer.

Apparently, oil tankers coming from Brazil are better and safer than a pipeline from Canada, whose best customer we will not be if they ship their tar sands oil to China instead.

Interestingly, another billionaire, Obama economic inspiration Warren Buffett, stands to benefit from the Keystone XL pipeline delay.

As oil production ramps up in the Bakken fields of North Dakota, plans to use the pipeline to transport it have been dashed.

As a result, North Dakota's booming oil producers will have to rely even more on the Burlington Northern Santa Fe (BNSF) railroad, which Buffett just bought, to ship it to refineries.

Buffett's Berkshire Hathaway has agreed to buy Burlington Northern Santa Fe in a deal valuing the railroad at $34 billion. Berkshire Hathaway already owns about 22% of Burlington Northern, and will pay $100 a share in cash and stock for the rest of the company.

North Dakota vaulted past Oklahoma and Louisiana in 2009 to be the nation's fourth-largest oil producer after Texas, Alaska and California.

Rail shipments accounted for up to 65,000 of the nearly 343,000 barrels of oil produced daily in North Dakota in December. That percentage is likely to increase.

Many of the rail shipments from the Bakken fields are being handled by BNSF Railway Co., which has more than 1,000 miles of tracks in the region.

Michael Bruce, the railroad's business development director, said BNSF could ship up 730,000 barrels of crude daily out of North Dakota "contingent on facilities being built."

North Dakota pumped a record 113 million barrels of oil in 2010. State officials estimate the state will produce 700,000 barrels daily in four to seven years.

Not only is BNSF shipping oil out, but construction and drilling materials in. BNSF says each drill rig and new well site in North Dakota require about two dozen railcars of materials for construction.

Construction of a Canadian pipeline west to send Canadian oil to China is a daunting task, as it would have to cross the Canadian Rockies. Coupled with the Keystone XL pipeline delay, any tar sands oil sent south would likely be shipped in BNSF railcars.

So far the environmentalists who worried about the Ogallala aquifer being polluted by pipeline leaks have said nothing about the increased risk of derailed railcars filled with crude — or the pollution the trains will spew as they chuff down the tracks.

But then the Occupy Wall Street crowd has nothing to say about billionaires, members of the 1%, benefiting from Obama's energy policies, which have killed tens of thousands of jobs for the remaining 99%.

The Bakken oil boom speaks volumes about the potential economic benefit of ending restrictions on domestic and offshore development.

That, coupled with the construction of the Keystone XL pipeline, would create a North American economic boom that would make OPEC literally pound sand.

It is the American people who should benefit from our government's energy policies, not just billionaires like George Soros and Warren Buffett.

http://news.investors.com/Article.aspx?id=591960&p=1

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