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Dakota, Part 5 - Paradigm Midstream's Bakken Crude Oil Gathering Systems

The collapse in crude oil prices and subsequent cuts in producers’ planned 2020 capital spending make it crystal clear that drilling activity in the Bakken will be slowing. Still, even with less drilling, it will take at least a few months for crude production in the North Dakota shale play to fall by much, and Bakken producers will continue to depend on crude gathering systems to give their wells the most efficient, cost-effective access to takeaway pipelines and crude-by-rail terminals. Longer term, it’s important to remember that sweet spots in the Bakken’s four-county core have some of the best rock outside the Permian. Today, we continue our series with a look at another leading midstreamer’s existing and planned gathering systems, as well as its joint-venture central delivery point, shuttle pipeline and crude-by-rail facility.

This is the fifth episode in our series on crude gathering systems in the Bakken. In Part 1, we noted that the shale play’s output peaked at ~1.26 in December 2014, a few months after crude prices started tumbling in the last crash, then bottomed out at ~960 Mb/d in December 2016, a few months after prices cratered to less than $30/bbl. For the next three years, as prices recovered, the Bakken was on a roll. By July 2018, Bakken production topped its December 2014 peak of ~1.26 MMb/d, then sped past 1.4 MMb/d in October 2018 and 1.5 MMb/d in October 2019. It’s stayed at or near that level since then. We mentioned in the same blog that there have been challenges to the Bakken rebound, including a shortfall in crude oil pipeline capacity out of the play — which was largely solved by the June 2017 startup of the Dakota Access Pipeline (DAPL) — and, more recently, the need for more gas processing capacity to handle the large volumes of associated gas emerging with the crude oil from Bakken wells. Gas processing constraints are well on their way to being solved, thanks to the addition of a number of new processing plants in 2019 and early 2020, and the late-2019 startup of the Elk Creek NGL pipeline that will help folks deal with all the mixed NGLs coming out of those processing plants.

In Part 2, we began our review of major crude gathering systems in the Bakken with a look at Hess Midstream’s pipelines and related assets. Owned primarily by Hess Corp. — a leading Bakken producer — and Global Infrastructure Partners, Hess Midstream owns and operates about 400 miles of crude oil gathering pipelines with a throughput capacity of 160 Mb/d, as well as two crude oil terminals, a crude header system and a big crude-by-rail facility. Then, in Part 3, we shifted our focus to the crude-related systems and assets owned by two other good-sized midstreamers: Enable Midstream Partners and Crestwood Equity Partners. Enable has two crude gathering systems with a total of about 175 miles of pipe, while Crestwood has a total of about 700 miles of pipe for gathering crude, natural gas and produced water, as well as the COLT Hub, with its storage tanks and crude-by-rail terminal. Last time, in Part 4, we looked at Oasis Midstream Partners’ crude-related assets in the Bakken, which include a 60-mile, 50-Mb/d gathering system in McKenzie County, ND; an oil terminal at the tail end of the system; and a ~20-mile, 75-Mb/d shuttle pipeline to link the system and terminal to DAPL and other outlets.

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