February 2025, Vol. 252, No. 2
Features
Bakken Natural Gas Expansion Gains Momentum Amid Pipeline Projects
(P&GJ) – The outlook for new oil and gas pipelines in the Bakken region over the next three years indicates some expansion and conversion projects to address capacity constraints, particularly for natural gas transportation.
Adding to the excitement in the region, Houston-based Kinder Morgan just acquired a gathering and processing system in North Dakota’s Williston Basin from Outrigger Energy II LLC for $640 million.
The deal includes a 270 MMcf/d processing facility and a 104-mile high-pressure rich gas gathering pipeline with a capacity of 350 MMcf/d. The system, strategically located in the Bakken formation, is supported by long-term contracts with key customers in the region.
“This strategic acquisition allows us to efficiently expand our footprint and provide incremental transportation and processing services to meet the growing needs of our customers,” said Tom Dender, president of Kinder Morgan Natural Gas Midstream, following the company’s announcement.
The transaction, which requires approval under the Hart-Scott-Rodino Act, is expected to close in the first quarter of 2025.
Kinder Morgan estimates the acquisition will immediately benefit shareholders, projecting a 2025 adjusted EBITDA multiple of eight times on a full-year basis. This calculation excludes $20 million in expected cash payments for 2025.
Here are some other key developments in the region:
Wahpeton Extension: A new natural gas pipeline called the Wahpeton Extension was placed in service in December. The 60-mile pipeline will run from the WBI compressor station near Mapleton, North Dakota, to Wahpeton, North Dakota.
Double H Pipeline Conversion: Kinder Morgan plans to convert the crude oil pipeline, which currently brings Bakken oil to Guernsey, Wyoming, into an NGL pipeline. This conversion is expected to be completed by 2026.
The conversion of the Double H pipeline from crude oil to NGLs service will have a big effect on the Bakken region’s economy and affect both the crude oil and NGL markets.
The conversion will remove an important crude oil transportation route from the Bakken to Guernsey, Wyoming. Double H can transport up to 88,000 bpd of crude oil.
The Bakken region is facing challenges with gas pipeline capacity, with major routes such as the Northern Border Pipeline running at full capacity. This could eventually hamper crude oil production growth, because producers will need to find markets for the associated natural gas and NGLs.
Despite the constraints, 40,000 bpd of crude oil production growth is expected during 2025. While there are some projects addressing natural gas and NGL transportation, the Bakken region may face continued challenges in balancing oil production growth with gas takeaway capacity over the next three years.
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