The Battle Rages On, Part 2 - Increasing Bakken Gas Flows Into the Northern Border Pipeline

The rapid increase of natural gas processing capacity in the Bakken in recent months has helped to ease producers’ growing pains, clearing the way for more crude oil and associated gas to be produced there and more Bakken gas to flow into the Midwest. That good news is countered, however, by bad news for Western Canadian gas producers, whose long-standing pipeline takeaway constraints only worsen as more Bakken gas flows into the Northern Border pipeline that cuts through North Dakota on its way to Chicago and other downstream markets. Today, we continue our series on the fight between Bakken and Western Canadian producers for space on Northern Border with a look at incremental flows into that key pipe.

In Part 1 of this series, we discussed how crude oil production has surged in the Bakken over the past two years, rising to a record 1.46 MMb/d in October 2019. This increase in production was fueled by higher oil prices during 2017-19, as well as the startup of the Dakota Access Pipeline (DAPL) in June 2017, which freed producers of prior takeaway constraints. Consequently, volumes of associated gas also soared, forcing Bakken producers and their midstream-company partners to build additional gas processing infrastructure to keep up with production. After years of lagging behind, those efforts came to fruition last year, with 670 MMcf/d of processing capacity added between July and December of 2019.

As outlined previously, all the new processing capacity added in the Bakken over the past three years has been built within a quartet of counties that sounds like the name of a law firm: McKenzie, Williams, Mountrail and Dunn. In the second half of 2019, the Bakken added four new processing plants (purple pentagons in Figure 1). Those facilities included:

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