February 2020, Vol. 247, No. 2


Bakken Pushes Forward, but Still Needs More Pipelines

Perhaps the biggest news to come from the oil-rich Bakken region during the year was the recent announcement by Dallas, Texas-based Energy Transfer that it wants to double the volume on its Dakota Access pipeline to 1.1 MMbpd. 

The 1,172-mile pipeline, which begins in North Dakota and travels through Iowa before terminating at a hub in central Illinois, would require upgrades where the Dakota Access links to midwestern pipelines, as well as construction of a series of pump stations along the route.

In order to increase capacity, Energy Transfer plans to also upgrade facilities along the route. A petition with the Illinois Commerce Commission has been filed for one new pump station. It also requests permission to build a new pump station on another pipeline that runs from the Illinois-Kentucky border to the Ohio River.

Additionally, WBI Energy plans to construct 67 miles of new pipeline, compression and axillary facilities to transport natural gas from core Bakken production areas in western North Dakota to an interconnection point with Northern Border Pipeline.    

This project will provide 200 MMcf/d of natural gas transportation capacity. WBI hopes to begin construction on the project in early 2021 year.  

“We are excited to grow our pipeline system to meet the natural gas transportation needs in the Bakken region,” Trevor J. Hastings, president and CEO of WBI Energy, told members of the Pipe Line Contractors Association. “We are working with our customers to meet these needs as the industry focuses on reducing natural gas flaring while growing production volumes.”  

Separately, Kinder Morgan and Tallgrass Energy undertook a JV open season looking for commitments to crude oil transportation service from Bakken origin points on the Hiland Crude system to refinery delivery points along the Pony Express system and to Cushing, Okla.

In July, a spokeswoman for Kinder Morgan told the Bismark Tribune that the company will evaluate expansion “based on the level of interest and volume commitments obtained.” 

A month earlier, Phillips and Bridger Pipeline entered into a JV on the Liberty Pipeline, a 24-inch pipeline that would transport oil from the Bakken and Rocky Mountain region to the Cushing hub.

Permitting on the project is underway and is expected to require two years of construction activity before commercial service is available. The companies are hopeful service can begin  in the first quarter of 2021.

According to the North Dakota Pipeline Authority, at the end of 2018 with the Brent-WTI spread between $9 and $10, nearly three-quarters of the Bakken oil production was moving via pipeline with 16% being transported by rail

Ron Ness, president of the North Dakota Petroleum Council (NDPC), told PGJ in early 2019 that there was still a lot more infrastructure needed in the region. He also pointed out that as long as there are other active oil and gas plays across the nation, North Dakota will have a struggle to maintain a large enough workforce. 

As the state’s economy expands, the oil and gas sector is just one opportunity for new graduates and a 750,000 population cannot support all of its workforce needs. He pointed out that additional oil and gas workers generally come from the Upper Midwest (Minnesota, Wisconsin and Montana), Oregon, Wyoming and Texas.

In January, the North Dakota Mineral Resources Department said production held steady in November with oil taking a slight dip to 1.52 MMbpd, with the department expecting similar results over the winter months. 

In late 2019, the amount of oil transported between North Dakota and Canada hit record levels for imports and exports moved by trucks and rail.

Crude pipeline flows from North Dakota’s Bakken had reached its highest level in six months in August, following the closure of the largest U.S. East Coast refinery cut crude-by-rail volumes, according to intelligence firm Genscape.

Outrigger Expands in Williston Basin with Commitment from XTO

Private midstream energy company Outrigger Energy II said it is constructing a 70-mile (113-km) gathering system and cryogenic plant in North Dakota to service XTO Energy natural gas production under a long-term, definitive gathering and processing agreement.

Denver-based Outrigger, which specializes in greenfield project developments, said it has already initiated construction on the 70-mile, 20- and 24-inch (508- and 610-mm) diameter, high-pressure, rich-gas pipeline and associated 250 MMcf/d (7.08 million cubic meters) cryogenic gas processing plant.

The system originates in eastern Williams County and terminates at a processing plant west of Williston, North Dakota. The system is planned to be operational in December 2020, and Outrigger said it already has plans for a 200-MMcf/d (5.66-million cubic meter) expansion that would boost total gas processing capacity of the plant to 450 MMcf/d (12.74 million cubic meters).

Outrigger will construct, own and operate the cryogenic processing plant and gathering system. The high-efficiency plant features ethane recovery and rejection capabilities that will provide direct market access to the Northern Border Pipeline system for residue gas and the ONEOK NGL pipeline system for natural gas liquids, Outrigger said. Future NGL fractionation facilities may be added to provide finished NGL products for local markets, it said.

“We are grateful XTO has entrusted Outrigger to build a gathering system with substantial capacity and state-of-the-art facilities that will assist XTO with execution of its significant development plans in Williams County,” Outrigger CEO Dave Keanini said.

“Routing of the gathering line will provide other Williston Basin operators access to much needed gathering and cryogenic processing capacity,” Keanini said. “Moreover, this additional midstream capacity for gas production north of the Missouri River allows the State of North Dakota to make strides toward its goal of minimizing gas flaring in the Basin.”

Outrigger Energy II is a full-service midstream company with a current focus on liquids-rich natural gas and crude oil infrastructure in the DJ Basin of Colorado and Wyoming and the Williston Basin. 

It is supported by equity commitments from NGP Energy Capital Management and an entity affiliated with private investor Brion G. Wise, who founded Western Gas Resources in 1971 and served the company in various executive and board positions until its sale to Anadarko Petroleum in 2006 for $5.3 billion.

Outrigger I developed assets in the Delaware, Midland and Powder River Basins starting in 2014. Outrigger sold its Delaware and Midland assets to Targa Resources in March 2017 and the Powder River Basin asset was sold to Tallgrass Energy in August 2017.

Founded in 1988, NGP is a private equity firm making direct equity investments in the energy sector with $20 billion of cumulative equity commitments.    

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