As North Dakota continues to curb flaring of natural gas amid projections that the volume of gas in the state to be captured will more than double by 2020 (see story this page), midstream companies in the state are working hard to make sure the infrastructure will be there to meet the increasing supply. During the North Dakota Governor’s Pipeline Summit on June 24, three of those gas midstreamers, Alliance Pipeline, Oneok Partners and WBI Energy, gave assessments of how they are working to help the state deal with the growing demand on gas gathering, processing and exporting.
Alliance
Tony Straquadine, manager of government affairs for Canadian-based Alliance Pipeline, described his company’s natural gas pipeline, which extends from western Canada to Chicago, as a “2,500-mile long truck” that transports high density, energy-rich natural gas from eastern British Columbia, Alberta, Saskatchewan and the Bakken to the Midwest (see map). The gas transported in the Alliance system has the natural gas liquids still entrained in Hess Corporation donates $5 million to UND for new laboratory complexthe gas stream, which Straquadine says makes the Alliance system a “pipeline within a pipeline.”
Alliance’s sister company, Aux Sable, has a gas processing plant in Chicago, which separates the natural gas liquids, NGLs, from the gas stream. “The Alliance pipeline is different,” he said, adding that Alliance looks to more Bakken producers as a “one stop” solution for both their natural gas needs as well as natural gas liquids needs.
As an example of just how rich the gas is that the Alliance system transports, on the day before the summit, June 23, Straquadine said some 140,000 barrels of natural gas liquids were separated from the Alliance system gas stream at the Aux Sable plant, and 40,000 of those barrels came from the Bakken.
Straquadine said Alliance is entering into a re-contracting phase for the first time since the pipeline went into service in 2000 with a 15-year contract that expires on Dec. 1, 2015. “So we have new capacity that’s available for contracting on its pipeline system.” In addition, he said Alliance recently completed a filing with the National Energy Board in Canada “to redefine how we work with producers going to a much more industry-friendly or a ‘skin-in-the-game’ approach where pipelines will take risk on term and capacity with a fixed toll overall.”
The Alliance mainline has two interconnections in North Dakota. The company’s Tioga Lateral is an 80-mile pipeline running from Hess Corp.’s Tioga gas plant to Alliance’s mainline in northern Renville County. That pipeline has a capacity of 126 million cubic feet, mmcf, per day and currently about half of that capacity is under contract with the balance of the capacity available.
The second interconnection is with Aux Sable’s Prairie Rose pipeline at Bantry in McHenry County. Straquadine said 80 mmcf of contracted natural gas are moving per day through Aux Sable’s Prairie Rose pipeline into the Alliance mainline. In addition, Aux Sable has the capacity to bring another 40 mmcf per day into the Alliance system.
Both the Tioga Lateral and the Prairie Rose systems are expandable with additional compression. “We have capacity to move about a quarter of the natural gas in North Dakota today on the existing systems. So 250 million of the 1 billion cubic feet that’s produced in the state,” Straquadine said. “We see production growing. We see opportunities to take more away. We can do some interesting things on our mainline pipe that’s been in the ground for 14 years, adding compression to move more gas as the demand might be there.”
Oneok
Unlike Alliance which moves the entire natural gas stream out of the basin before separating out the NGLs, Oneok Partners has a number of gas plants in the basin that separate the NGLs before the dry gas is exported. Oneok also has an NGL pipeline that exports the NGLs to the Midcontinent.
Oneok Vice President Kevin Burdick said flaring is a challenge and Oneok is stepping up to that challenge. “When you look at the growth that’s occurring from a natural gas perspective, and you look at the flaring targets, that’s a challenge. But we’re stepping up to that challenge and we’ll continue to work to achieve those targets and even beat those targets as we go forward. But it is staggering when you look at the volume of gas that has come online and we project will be coming online over the next several years. And that’s going to require investment, and that’s going to require continued investment both in gathering lines and in compression and in plant processing capabilities and in the takeaway also.”
“We’ve been investing in the basin and we’ll continue to do so,” Burdick said, adding that over the last several years Oneok has invested more than $3 billion on gathering infrastructure, processing infrastructure and NGL takeaway “to get products from the wellhead to the ultimate markets and create that value for the producer.”
Oneok has six gas processing plants operating in the Williston Basin, three of which are in the Bakken region. Oneok has two more plants under construction, and a third in the planning stages. That brings to six the number of gas plants the Tulsa-based midstreamer currently has on its Bakken roster. All of the Bakken plants have capacities of 100 mmcf per day except the one in the planning stage, which is the company’s Lonesome Creek plant, and will have 200 mmcf per day capacity. When the Lonesome Creek plant goes online, Oneok will have approximately 800 mmcf per day of natural gas processing capability in the Williston Basin.
Oneok’s Bakken NGL pipeline, which went into service in 2013, transports NGLs from processing plants in the Williston and Powder River basins to the Overland Pass pipeline in northern Colorado, which then sends the NGLs to the Midcontinent. Oneok is currently expanding the capacity of the Bakken NGL pipeline from 60,000 barrels per day to 135,000 bpd, and has plans for further expansion to 160,000 bpd in 2016.
Going forward, Oneok has an investment backlog of $3 billion to $4 billion and a “lengthy” backlog of unannounced growth projects, and the company is already looking at possible future investments beyond 2018. “We’re not done,” Burdick said. “As we have in the past, as we continue to look at those volume forecasts and you look at the acreage and the … commitments we have with our producers, there’s more out there. We’ve got, again, our Lonesome Creek facility coming online and as we have those commitments and the forecasts line up, we’ll be out with other announcements.”
WBI Energy
Rounding out the gas midstreamers presenting at the summit was Bismarck-based MDU Resources subsidiary WBI Energy, which Vice President Rob Johnson said has “been in the pipeline business in Montana and North Dakota for over 90 years.”
WBI Energy has two major divisions, a midstream unit and a gas transmission unit. WBI Energy’s midstream unit has operated facilities in Montana, Wyoming and Colorado and soon will have operations in Utah. The gas transmission unit has pipelines in North Dakota, Montana, Wyoming and South Dakota. In the Bakken, WBI Energy has an extensive gas transmission network with numerous producer receipt points and interstate pipeline interconnects through which it takes residue gas from a number of processing plants.
WBI Energy has been expanding its takeaway capacity. In 2010 the company was taking away approximately 100 mmcf per day, but by the end of 2014, the company expects to be taking away nearly 600 mmcf per day. And the company has plans for even more takeaway capacity with two current projects.
One of those projects is the company’s Garden Creek expansion, which is a 15.5-mile, 215 mmcf per day pipeline that will move more gas away from Oneok’s Garden Creek II and III plants. That project is currently under construction and is expected to be in service in the first half of July. Combined with its existing Garden Creek pipeline, WBI Energy will have more than 350,000 mcf per day takeaway capacity from the Oneok Garden Creek plants.
WBI Energy’s other current project is its Dakota Pipeline, a 400 mmcf per day bidirectional pipeline that will run approximately 375 miles from the Bakken to connecting points on the Viking and Great Lakes interstate systems in Minnesota. Those two systems have a combined capacity of approximately 2.5 bcf per day and provide access to Midcontinent markets as well as Midcontinent storage. And storage, Johnson said, is an important factor for North Dakota gas production. “This gas moves each and every day,” he said. “With the seasonality of the upper Midwest, in the wintertime there is plenty of demand to use this gas up - in the summer it needs a home. Storage provides that home.”
The Dakota Pipeline will also have ethane straddle capacity if necessary. Johnson said the gas going into its system from Bakken plants currently contains about 20 percent ethane. With a straddle option, ethane could be extracted near Tioga and put into the Vantage pipeline that runs north to Nova Chemicals Corp.’s petrochemical processing in Alberta.
Johnson said WBI Energy is still working on shipper commitment, and if the project gets subscribed, he said WBI Energy will begin the FERC pre-filing work along with the final design and route determination as well as right-of-way, environmental and regulatory work, and community meetings. “Getting this thing out in front of the affected stakeholders will be key to this project on a go-forward basis.” If all of that is successful, Johnson said, WBI Energy expects construction on compression locations would begin in 2016 and pipeline construction would begin in 2017 with service expected to begin in late 2017.
