Alliance Pipeline

The Bakken Shale needs more natural gas takeaway capacity, North Dakota wants to encourage more in-state consumption of Bakken-sourced gas, and two entities — WBI Energy and a combo of Intensity Infrastructure Partners and Rainbow Energy Center — have each proposed similar (but not identical) cross-state pipelines that would help achieve those aims. But, assuming that two new pipelines would be overkill, which of the two proposals is the more likely to advance to a final investment decision (FID), construction and operation? In today’s RBN blog, we discuss the two competitors and the state of North Dakota’s impending decision on which pipeline project to support.

The Montney Formation in British Columbia and Alberta is exclusively responsible for the turnaround in Western Canada’s natural gas production in the past decade. Gas production in the Montney — a vast area with extraordinary reserves — has doubled in that time, with most of that growth coming from the BC side of the formation. This phenomenal growth story stems from a few key factors, including steadily improving gas well performance and increasing wellbore length, coupled with access to an established network of gas pipelines. Today, we delve into what has made BC’s portion of the Montney such as standout.

In just a few years, the Montney Formation has become the most prolific natural gas production region in Western Canada. Starting from zero in 2005, the Montney has been the primary growth engine for gas supplies and continues to challenge producers to deal with its vast geographic extent and enormous reserve potential. Spread across swaths of Canada’s two westernmost provinces, the formation’s unique geology has meant that its gas production growth has moved at different speeds depending on location, geology, and pipeline access. In this first part of a three-part series, we take a closer look at this important formation.

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.

Crude oil prices and, just as important, the availability of pipeline takeaway capacity, have supported continued production growth in the Bakken. Good news, right? Except, that’s led to sharply increased output of associated gas in a region that for years has been playing catch-up on the gas processing capacity front. As a result, gas-flaring volumes have soared this year, putting pressure on crude-focused producers to slow down their drilling-and-completion activity. Things are finally getting better, though — 670 MMcf/d of processing capacity has come online in western North Dakota since late July, and another 200 MMcf/d will start up next month. That gives Bakken producers some room to grow but also poses a problem for Western Canadian producers, namely that more pipeline gas out of the Bakken means less room for Alberta and British Columbia gas on pipes to the Midwest. Today, we begin a short blog series on incremental Bakken gas processing capacity and its impacts on producers — and natural gas prices — up in Canada.