Express Yourself (Dakota) – Koch’s Bakken Crude Oil Pipeline Plan

At the end of June Koch announced plans for an open season that started July 1, 2013 to solicit interest in a pipeline project to deliver 250 Mb/d of crude from the Bakken to Hartford and Patoka, IL. Koch’s plans suggest the new pipe could connect to St James, LA on the Gulf Coast via the proposed Energy Transfer/Enbridge Energy joint venture Gulf Coast Crude Access pipeline. If the pipeline proceeds, it would come into service in 2016. Earlier Bakken pipeline projects have failed because of flexible rail options. But rail rates from the Bakken to the coasts are currently underwater due to narrowing crude spreads. Today we review the project’s prospects.

The Proposal

On July 1, 2013 Koch launched a non-binding, 45-day open season seeking shipper interest in the new pipeline to be known as the Dakota Express. If enough shippers show interest during the 45 days the company will launch a binding open season for formal commitments. If the project goes ahead and gets permit approvals it will start up in 2016 with an initial capacity of 250 Mb/d.

The proposed pipeline will start with a brand new 600-mile section from “Western North Dakota” (Koch doesn’t say where exactly) to Minneapolis, MN where it will connect with their existing Wood River crude pipeline. The Wood River pipeline currently runs south to north from Wood River, IL to Minneapolis and feeds a Koch affiliate 277 Mb/d Flint Hills Resources refinery. The project calls for reversing the Wood River pipeline to flow from Minneapolis to a Koch terminal at Hartford, IL. A new pipeline section will then link Hartford to Patoka, IL. From Patoka Koch says they will explore connecting to the proposed Eastern Gulf Crude Access (EGCA) Pipeline - a joint venture of Energy Transfer Partners and Enbridge Inc- also known as the Trunkline reversal (see Enbridge SAX and East Coast Pipe). That pipeline would carry Bakken and Canadian heavy crude from Western Canada south to St James, LA and Gulf Coast refineries.  Koch has not published a publically available map of the proposed pipeline route that we are aware of. We know how hard it is to visualize these things without a picture so we superimposed the likely route (see map below) onto an Enbridge analyst presentation to give you an idea. 

Source: Enbridge Investor Presentation and RBN Energy (Click to Enlarge)

The map shows how closely the proposed Koch pipeline route (red arrows) follows that of the Enbridge North Dakota pipeline that runs east out of the North Dakota production region to Clearbrook, MN where it joins the Enbridge Mainline pipeline carrying Bakken and Canadian crude to Flanagan, IL and then to Cushing, OK. Enbridge is also planning to build a link from Flanagan to the EGCA pipeline at Patoka – called the Southern Access Extension (SAX) Pipeline. By using the proposed Koch pipeline Bakken shippers would be able to avoid the huge Enbridge Mainline pipeline that has been subject to constraints that have occasionally limited Bakken crude takeaway capacity. If all three pipelines are built though, the Dakota Express would compete with Enbridge SAX barrels for space on the EGCA pipeline to Louisiana (expected capacity 420-600 Mb/d – marked with green arrows on the map).

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