The Niobrara production area in the Rockies is a complicated place to determine crude oil supply and demand balances. It’s at the crossroads of a number of supply areas, with volumes coming in from Canada and the Bakken, as well as locally from the Powder River and Denver-Julesburg basins. And in terms of destinations, there are well-established local markets, or you can send the molecules to Salt Lake City, or southeast to the Cushing, OK, hub and beyond. The Niobrara is one of the few growth areas we look at where there is substantial pipeline capacity for inflows and outflows, with the option to service multiple markets. Now, there are a couple of new pipeline projects ramping up in the Rockies, and given the region’s interconnectivity, it’s a good bet that the status quo in the Niobrara is in for some big changes. Today, we recap the new pipeline projects and then dive into what it could mean for the midstream balance in the Powder River and D-J.
In Part 1 of this series, we highlighted the myriad of new projects that have been announced in the Rockies and Western Canada in the past few months. Chief among them a prospective expansion of the Dakota Access Pipeline (DAPL), and the decision to proceed with construction of the Liberty Pipeline. DAPL (orange line in Figure 1), co-owned by Energy Transfer Partners and others, is a 570-Mb/d system that could be expanded up to 1.1 MMb/d if its open season goes well. You can read more about that project, and the downstream pipe expansion, in Part 2 of this series. The Liberty Pipeline (dashed pink line in Figure 1), which we also highlighted in Part 1, is a Phillips 66 and Bridger Pipeline project with a capacity of around 400 Mb/d, and the ability to connect to Cushing and Gulf Coast markets. Now, here in Part 3, we will examine what the possible advancement of both projects will do to the supply/demand balance in the Niobrara, and how that could impact other projects moving forward.