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Tighter Regulatory Environment to Hurt Bakken

Various news outlets reported in early July that the United States has succeeded in becoming the world’s largest producer of oil. The combined total output of 11 million barrels per day – which includes other liquids besides crude oil, such as natural gas liquids – was enough to move past Russia and Saudi Arabia into the top spot.

U.S. oil production is now at its highest level since 1972, and the Energy Information Administration projects growth will continue for at least the next several years.

Much of the success for the dramatic growth in American oil production can be attributed to a few shale formations – most notably the Eagle Ford and the Bakken. That has made a lot of companies very rich. The Bakken alone is now producing five times as much oil as it was producing in 2009.

But there are several reasons why the glory days of rapid growth may be a thing of the past.

Only a few years ago, drillers came in and drilled at a record pace with little oversight. That came with a lot of consequences and drawbacks for the state, and regulators are finally catching up.

First, are the bomb-trains. The extraordinary increase in fiery explosions of trains carrying Bakken crude – the worst of which killed 47 people in Lac-Megantic in the summer of 2013 – have raised the ire of local communities and the media. Until recently, the trains operated largely in secret, with their itineraries unknown even to safety regulators…

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