Hiland Partners and Tallgrass Energy independently announced Dec. 18 an extension of the joint open season on their connecting pipelines which provide crude oil transport service from the Williston and Power River basins to Cushing, Oklahoma. With the announcement, the open season is extended to Jan. 23, 2015.
Hiland’s 50,000 barrel per day Double H extends from near Dore along the Montana border in far western McKenzie County, North Dakota, into eastern Montana and down through eastern Wyoming to a regional hub at Guernsey, Wyoming. Hiland is expanding the Double H capacity by an additional 50,000 bpd and the open season is for commitments on that expansion. The Double H is expected to go into service with the initial 50,000 bpd capacity in the first quarter of 2015 with the full 100,000 bpd capacity expected to be available in 2016.
Tallgrass’ 230,000 bpd Pony Express runs from Guernsey across portions of Nebraska and Colorado through Kansas and on to a Midcontinent hub at Cushing. The Pony Express is being expanded by an additional 100,000 bpd and committed shippers will be provided with a pro-rata share of that expansion capacity.
Stepping up after Enterprise
Those two announcements came just days after Enterprise Products Partners announced in a very brief press release that it was shelving plans for its proposed 1,200-mile, 340,000 barrel per day Bakken-to-Cushing crude oil pipeline. “Commitments received from potential shippers during the recent open season were not sufficient to support the project,” was all the company had to say about the reason behind its decision to scrap the project.
Enterprise provided details on the proposed Bakken to Cushing project during the North Dakota Governor’s Pipeline Summit in June. It would have followed a route generally similar to the route of the combined Double H and would have had two origins in North Dakota, one at Stanley in central Mountrail County and another in the Johnsons Corner area in northeast McKenzie County, both running west to the Montana border. From there the line would have run south through eastern Montana, Wyoming and on through the Denver-Julesburg Basin in Wyoming and Colorado before turning southeast and eventually running through the Mississippian Basin before terminating at Cushing. The project would have also added 500,000 barrels of storage at Stanley and 200,000 barrels at Johnsons Corner.
The Enterprise announcement appears to put Tallgrass in an advantageous position. “Extending our open seasons beyond the holidays gives interested shippers more time to work through the process,” said Doug Johnson, Pony Express general manager. “It (the extended open season) also allows shippers who may have committed to a recently cancelled competing pipeline project an opportunity to commit to the Pony Express expansion. We will move forward with our pipeline expansion to accommodate all qualified, committed shippers.”
On the Hiland side, Senior Vice President Jim Suttle said the Double H expansion and Pony Express covered by the open seasons do not depend on a minimum commitment threshold. “Hiland will move forward with its pipeline expansion to provide the level of capacity requested by qualified committed shippers.”
WB pipeline export capacity
Presently there are only three main transport pipelines through which Bakken producers can export crude. One is Enbridge’s 355,000 bpd North Dakota mainline system that extends from multiple receipt points in the Williston Basins to Clearbrook, Minnesota.
Another is True companies’ Bridger and Belle Fourche pipelines that provide up to 260,000 bpd transport from western North Dakota and Eastern Montana to the Guernsey, Wyoming, hub. Like Hiland, True also has a joint tariff with Tallgrass on the Pony Express. That joint venture provided the first direct route from the Bakken to Cushing. True also has a rail loading facility near Guernsey at Fort Laramie.
The third crude oil export pipeline is Plains All American’s 40,000 barrel per day Bakken North line that runs from Trenton near Williston to Outlook near the Canadian Border in far northeast Montana where it connects with the Wascana Pipeline. The Wascana then carries crude north to Regina, Saskatchewan. That system has an expansion capacity of up to a total of 70,000 bpd.
Combined, the current systems provide the Williston Basin with approximately 655,000 bpd of crude oil export capacity. The Hiland system is expected to be operational in January, increasing the basin’s export capacity to approximately 705,000 bpd, and with the Hiland expansion, the capacity will rise to approximately 755,000 bpd by 2016.
Other ongoing projects
With Enterprise pulling the plug on its Bakken to Cushing project, there remain just two export pipeline projects on the drawing board. One is Enbridge’s Sandpiper, a proposed 225,000 bpd line running from western North Dakota to Clearbrook in western Minnesota, then across that state to Superior, Wisconsin. That project has hit permitting snags in Minnesota. Currently the state’s Public Utilities Commission has five public hearings on the project scheduled for January. Enbridge has also been holding its own public meetings, not only on the Sandpiper, but also on its Line 3 replacement project from Edmonton, Alberta, to Superior.
Energy Transfer Partners is pursuing its 320,000 bpd Bakken pipeline to run from the Williston Basin to Patoka, Illinois. The company’s board of directors approved the project in June, but that pipeline has also run into permitting issues, this time in Iowa. ETP has been holding public meetings with the Iowa Utilities Board to address concerns Iowans have with the project.
If approved and constructed, the Sandpiper and Dakota Access projects would add 545,000 bpd to Williston Basin pipeline export capacity and would bring that capacity to more than 1.2 million bpd.
Not the first major project scuttled
Enterprise’s Bakken to Cushing project is the third proposed major export pipeline to be shelved in the last two years. Koch Pipeline Co. announced an open season in June 2013 for its 250,000 bpd Dakota Express crude oil pipeline to run from the Williston Basin to hubs in Illinois. However, Bloomberg in January 2014 reported a Koch spokesperson said the company was no longer pursuing the project but did not offer a reason.
In 2012, Oneok announced plans for its 200,000 bpd Bakken Express crude pipeline planned to run to Cushing from Bakken receipt points in Montana and North Dakota, but following insufficient commitments in an open season, Oneok opted not to proceed with that project.
