When the first Governor’s Pipeline Summit was held in June of 2012, Gov. Jack Dalrymple opened the event with a charge to midstream companies. “Build more, do more, gather more. And please do it as soon as you possibly can because there’s no single thing that helps us more with the impacts on our communities,” he told the group of more than 100 pipeline industry leaders, energy industry representatives and state and local officials at the first summit two years ago.
Now the governor has called on the same leaders to join together again for a second summit slated for June 24 at the auditorium of Bismarck State College’s National Energy Center of Excellence. The summit will provide an update on North Dakota’s current oil and natural gas pipeline landscape and to promote greater development of the state’s energy pipeline system.
Two years change a landscape
The state’s Pipeline Authority Director Justin Kringstad told Petroleum News Bakken that the biggest change in the last two years is the rapid pace of crude oil production. While Kringstad doesn’t stray from the overall production data from two years ago that indicates the Williston Basin will hit the 1.4 million to 1.6 million barrels per day range around 2023, production has increased much faster than predicted in 2012.
“The efficiencies, enhancements and completion techniques have caused oil production to rise quicker than we thought,” Kringstad said. “We were producing under 600,000 barrels a day back then, so it’s significantly different now.”
At the last summit, Kringstad highlighted four challenges facing the industry at that time: moving oil to viable markets; moving oil to gathering lines; congestion and decreased demand of light, sweet crude in the Midcontinent region; and the growth of shale resources throughout North America and its impact on the Bakken.
Two years later, those challenges remain, but some progress is being made. A rise in oil via rail transport has kept Bakken crude moving to the coasts. In 2012, only about 225,000 barrels of Williston Basin oil were put on rail cars each day, which equated to only 28 percent of the export share. Today, rail transportation accounts for 66 percent, according to the latest data provided by the Pipeline Authority. At the end of 2013, rail transportation spiked to more than 800,000 barrels of oil per day leaving the basin.
The export shifts come as the price spread between Brent crude and West Texas Intermediate, WTI, fluctuates. In 2012, the price differential averaged $17.50 between Brent and WTI, whereas the spread is only in the $5 to $8 range today.
Getting trucks off the road
Kringstad said one aspect that has improved in the past two years is getting a handle on crude oil gathering. In 2012, 74 percent of the state’s crude was gathered by truck and only 26 percent by pipeline. With the most recent data from September 2013, 56 percent of the oil is gathered by truck and pipes are taking 44 percent.
“The percentage did go up quite a bit, but also volume ramped up a lot,” Kringstad said. “With percentage and volume going up, the total volume piped is substantially more than it was two years ago.” He said he plans to crunch the numbers and present them at the June 24 summit showing just how many more barrels are gathered by pipe since 2012, which he said should be a sizable number.
Another tally worth noting is the number of new well connections to gas processing facilities. Kringstad said this has been a major development, and in the past 12 months the state has seen more than 2,100 well connections whereas the same time period two years ago was around 1,200 connections.
He noted that some pipeline projects presented at the last summit did not come to fruition, such as Oneok’s Bakken Express crude oil pipeline and Saddle Butte’s High Prairie Pipeline. “They didn’t come together, so there’s been some changes in what the field is going to potentially look like going forward,” Kringstad said.
Putting their heads together
Dalrymple hopes that by bringing pipeline companies and government officials together, the summit will encourage development of more pipelines to safely ship oil and natural gas to markets throughout the United States.
“Increasing North Dakota’s pipeline capacity, both gathering lines within North Dakota and larger, interstate pipelines, is critical to meeting the needs of an energy industry that continues to produce greater supplies of high-quality oil and natural gas,” Dalrymple said in a statement.
The summit will include a summary of North Dakota’s progress in expanding its oil and natural gas pipeline systems, an update on pending oil and natural gas pipeline projects, a report from the governor’s advisory panel on pipeline technology and presentations that address regulatory authority, the rights of surface owners and right-of-way issues.
Kringstad has been chairing the pipeline technology group and is in process of preparing a report with its findings. Right-of-way issues are being addressed by a task force initiated by the North Dakota Petroleum Council and the attorney general’s office that has been meeting regularly since February.
