The Race is On and it Looks Like ONEOK – Bakken NGLs Production Growth

Natural gas liquids (NGL) production from the Bakken has increased from only 20 Mb/d two years ago to almost 50 Mb/d today.  And that is with nearly one-third of the natural gas in the region being flared and no outlet for ethane.  For years gathering, processing and pipeline constraints have held back production growth.  But that’s all changing.  ONEOK has completed their NGL pipeline and plant expansion project and more outlets are on the way.  Production could rise to more than 300 Mb/d by 2018.  In today’s blog, we examine the Bakken NGL situation.

Check out Kyle Cooper’s weekly view of natural gas markets at http://www.rbnenergy.com/markets/kyle-cooper

 

Crude oil from the Williston Basin has received a lot of attention recently with North Dakota oil production hitting 779 Mb/d in Feb 2013 according to the preliminary numbers released in the North Dakota Industrial Commission’s (NDIC), “Director’s Cut” report on April 16, 2013.  This level of oil production is an all-time high for the state, and with it is coming a lot of liquids-rich associated gas.  Feb 2013 gas production is expected to come in at 850 MMcf/d which is also an all-time high for North Dakota.  In the April report the NDIC reported 8,492 (preliminary) producing wells in February, and an estimated 375 wells waiting on completion services at the end of January.

There is good news from ONEOK for producers with wells awaiting completion, and for producers that are currently flaring gas at the wellhead waiting on connections to gathering systems and processing plants. Flaring of natural gas continues to hover around 30% in ND.  For additional insights into flaring in the Williston Basin see Why Will Bakken Flaring Not Fade Away?

On April 9, ONEOK announced the completion of three projects that are part of its previously announced $4.7 billion to $5.3 billion growth program through 2015.   Included in the list of projects completed are the Bakken NGL Pipeline that transports unfractionated NGLs from the Bakken Shale and Three Forks formations in the Williston Basin to the partnership's 50 percent-owned Overland Pass Pipeline, a 760-mile NGL pipeline extending from southern Wyoming to Conway, Kansas (See Figure 1).  ONEOK also completed their Stateline II natural gas processing facility in western Williams County, N.D.

Figure 1 – Bakken NGL Facilities; Source ONEOK/RBN (click image to enlarge)

With the addition of the Stateline II there is now nearly 1 Bcf/d of operational processing capacity to support ND Williston Basin production. For a map of the existing ND natural gas infrastructure as of December 2012, including existing processing plants and a look at wells that have already been tied into gathering systems check out the ND Pipeline Authority’s ND Gas Gathering Map Dec 2012.

With the completion of the $600 million, 600-mile, 12-inch diameter Bakken NGL pipeline and the Stateline II processing plant, producers now have additional options for getting their NGLs to market. This additional infrastructure will reduce, but not solve completely, the flaring problem as ND gas production is expected to outpace infrastructure development over the next several years.

Until the ONEOK system was completed, shippers had only two alternatives for getting their NGLs to market: truck/rail and the Alliance-Aux Sable system which transports dense phase, high pressure NGL rich gas, 1,600 miles from Alberta to Chicago, and passes through North Dakota on the way.  While passing through North Dakota the Alliance-Aux Sable system picks up production from an existing lateral, the Prairie Rose pipeline, which moves rich gas from the Palermo conditioning plant to the Alliance pipeline.  Alliance Pipeline announced plans to build a second 80 mile lateral pipeline and associated facilities connecting Hess Corporation’s Tioga, ND gas processing facility to Alliance near Sherwood, ND.  The proposed line will have a capacity of 106 MMcf/d and is expected to be in service by July 2013. For more on the Alliance-Aux Sable system see When liquids are not liquids. The Bakken-Alliance-Aux Sable connection

As of this month, shippers now have the additional ONEOK alternative.  That pipeline has an initial capacity of 60 Mb/d and can be expanded to 135 Mb/d with additional pump stations.  The expansion is expected in Q3 2014.  We understand that the capacity expansion is backed by firm fee-based contracts with shippers.

There is another alternative coming soon for Bakken ethane.  The Vantage Pipeline will move purity ethane from the Hess processing plant at Tioga, ND up to Empress, Alberta to feed the NOVA petchem facility at Joffre.  The proposed Vantage project will kick off with 40 Mb/d of capacity and is expandable to 60 Mb/d.  It is expected to be in service later this year as is the 130 MMcf/d expansion of Hess Corporation’s Tioga gas processing plant which will bring total capacity of the plant to 250 MMcf/d.  

ONEOK’s Bakken NGL Pipeline is the first pipeline to transport natural gas liquids from the Williston Basin to NGL fractionation and storage infrastructure in the Mid-Continent and ultimately to Mont Belvieu.  

What does all of this mean for future production of NGLs from the Bakken Shale and Three Forks formations in the Williston Basin?  Figure 2 below shows the latest data available from the Energy Information Administration (EIA) for NGL production from the Minnesota-Wisconsin-North and South Dakota portion of PADD II.  Production from this portion of PADD II was 48 Mb/d in January 2013, which essentially is synonymous with production from the Williston Basin as it is the only production in the region.

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