At the recent Platts Oil and Gas Conference in Denver, the reoccurring theme was outbound capacity constraint. The area needs a lot more crude oil pipelines and rail terminals to mitigate regional oil price crashes (see Bakken’ and a Rollin’ at Clearbook and Guernsey). The natural gas situation is worse, with more than one-third of natural gas on the North Dakota side of the Bakken being flared. The region needs more gas gathering systems and more takeaway capacity.
Then there are the NGLs. Most of the Bakken crude comes along with rich associated gas. But unlike dirt cheap natural gas (most points still below $2.00), NGLs are highly valuable with the weighted average price in Mont Belvieu equivalent to about $13.00/MMbtu. Of course, you have to get it there.
The project that gets the most press for getting NGLs out of the Bakken is the Oneok Bakken NGL pipeline, a $500 million, 500-mile system from Richland County, MT down to Weld County, Colorado where it will hook into Oneok’s 50-percent owned Overland Pass Pipeline. That will get 60 Mb/d of mixed NGLs (Y-grade) out of the Bakken. Another pipeline that will get barrels out of the region is the 45 Mb/d Vantage ethane system from the Hess processing plant at Tioga, ND up to Empress, Alberta to feed the NOVA petchem facility at Joffre.
But there is another way of getting NGLs out of the Bakken. It is an alternative with significant advantages, but does not seem to get the airplay of some of the other projects. And that’s because it doesn’t fit neatly into one of the traditional hydrocarbons asset buckets. It is not an NGL pipeline, but it moves 80,000 barrels of NGLs each day. It takes wet gas with only superficial processing, but processing is an integral part of the integrated system. It has one operational lateral already moving product out of Mountrail and Ward Counties, and has another lateral going into the Tioga plant next year. Of course, this is the Alliance Pipeline - Aux Sable system.
Alliance-Aux Sable has an incredible history starting on the back of a restaurant napkin. If you are curious, the story is here.
Troy Andrews from Aux Sable and Jason Feit from Alliance both made presentations at the Platts conference. My notes from Troy’s presentation are below. A few of his slides are included as a pdf and may be downloaded at the bottom of this posting.
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