Bakken Pipeline & Midstream News

Quantum Energy, Inc. Secures Two Bakken Refinery Sites

Expected Production of 7,000 b/d Diesel Fuel from Each Facility

At the end of August, 2014, Tempe, AZ-based Quantum Energy, Inc. secured two refinery sites to serve the Bakken. The refineries are part of a proposed five refinery plan the company has for the area.

One of the refineries will be located in Richland County, MT, near Fairview and is accessible to the Northstar Transload currently under construction in North Dakota. The other refinery will be located in Baker, MT.

Quantum President Stan Wilson, said, “each of our proposed Energy Centers will produce 7,000 b/d of diesel fuel to be sold into a local market that has a demand for 75,000 b/d in the western North Dakota and eastern Montana markets. The 14,000 b/d that these two Energy Centers will produce are easily absorbed in the ever expanding Bakken region.”



Hess to form MLP for Bakken Midstream Assets

25% Bakken Production Growth Year-Over-Year in Q2 2014
Hess' Bakken Acreage Map

Hess’ Bakken Acreage Map

At the end of July, 2014, Hess Corp. announced its plan to spin off pipeline and storage assets, mostly in the Bakken area, into a MLP (master limited partnership) next year. The effort is a strategic move for the company to generate cash and further production growth in the Bakken.

The company expects to file a registration statement with the U.S. Securities and Exchange Commission in the fourth quarter and move forward with an IPO (initial public offering) of the MLP in the first quarter of 2015. Hess said it will own the general partner of the MLP, all of its incentive distribution rights and a majority of its limited partner interests after completion of the IPO. With an MLP, the partnership does not pay taxes from the profit, and the money is only taxed when unitholders receive distributions.

Assets that would be held by the MLP include the Hess’ Tioga natural gas processing plant; a rail loading terminal in Tioga along with associate rail cars; a crude oil truck and pipeline terminal in Tioga; and a propane storage cavern and related rail and truck loading and storage terminal in Mentor, Minnesota.

Read more: Hess Production to Soar in Bakken by the End of 2014

The announcement was concurrent with the company’s second quarter earnings, which indicated a 25 % growth in Bakken production year-over-year (80,000 boe/d). During the quarter, the company brought 53 gross operated wells online. Drilling and completion costs were down 12% year-over-year.


Summit Midstream Expanding Bakken System – $300 Million

Includes Four Projects Across Williams and Divide Counties

Summit Midstream Partners announced in June of 2014 that it will spend $300 million on four new development projects involving oil, water and natural gas gathering in the Bakken Shale play.

The new projects will further expand the companies footprint in Williams and Divide counties. In June of 2013, Summit announced plans to spend $60 million on development projects in North Dakota.

Read more: Summit Midstream Expanding Bakken System in Williams and Divide Counties

One of the Summit’s new projects is geared towards providing customers with additional crude oil interconnects. Meadowlark, a wholly owned operating subsidiary of Summit, will construct a new crude oil truck unloading station. With this project, Meadowlark will provide its customers with a new interconnect for up to 50,000 b/d of crude oil deliverability, providing access to new downstream markets on both the East and West Coasts.

“We expect our new organic development projects will further enhance Summit’s position as a leading, independent midstream provider in the Bakken Shale,” said CEO Steve Newby.

Another of the company’s recently announced projects is a new 240 mile pipeline, which officials say will reduce flaring in North Dakota, as the pipeline gathers natural gas in a remote area currently lacking in infrastructure. The pipeline will be constructed by Tioga Midstream, a subsidiary of Summit Midstream. When it is completed, it is expected to have a total system capacity of 20,000 b/d of crude oil, 25,000 b/d of water, and 14 million cf/d of associated natural gas. The project is supported by a 10 year agreement with an acreage dedication of 114,000 acres.


Worthington Industries Acquires Tank Storage Division of Steffes Corporation in North Dakota

Steffes Corporation Generated 25 Million in Revenue in 2013
Bakken Oilfield StorageTanks

Bakken Oilfield Storage Tanks | Click to Enlarge

Worthington Industries expands its reach in the Bakken, purchasing the tank storage manufacturing division of Steffes Corporation for an undisclosed amount in late March 2014. Steffes Corporation manufactures oilfield and salt water storage tanks for clients in the Bakken Shale and Williston Basin, and generated $25-million in revenue in 2013. Worthington will acquire Steffes Corporation’s Dickinson, N.D. plant in the deal, which currently employs 35 people.

[Read more...]

MDU Resources’ Natural Gas “Dakota Pipeline” Update – March 2014

Open Season For Pipeline Ends May 30th
Bakken Natural Gas Pipeline to Minnesota - WBI Energy

Bakken Natural Gas Pipeline to Minnesota – WBI Energy | Click to Enlarge

The open season for MDU Resources’ natural gas “Dakota Pipeline” will end on May 30th, but the project may not have any legs. In a Reuters report, company officials indicated at a New Orleans energy conference in March that they are currently lacking enough binding commitments for the project. The company began it’s open season on January 30th for the $650 – $700 million project, which is intended to transport natural gas through North Dakota to interconnection points in Northwestern Minnesota.

Read more: WBI Energy’s Bakken Natural Gas Pipeline Enters Open Season

Dave Goodin, MDU’s CEO, told Reuters, “we’re encouraged by the reaction of the marketplace, but I’d be getting ahead of myself if I said we’re ready to build. We need some binding commitments.”

WBI Energy, a subsidiary of MDU Resources, revealed in a press release in January that construction on the proposed pipeline could begin in 2016, with a completion date of 2017. Despite the lack of current commitments, Goodin is encouraged about the pipeline, but admits in the Reuter’s report that the challenge is for the marketplace to see that far in advance. The natural gas rig count in the Bakken has held flat at -0- for some time, and the price of natural gas since the beginning of 2014 has hovered between $4 – $6/mmbtu.

The pipeline makes sense for the region from a flaring standpoint according to the North Dakota Industrial Commission (NDIC). Currently, ~30% of all natural gas produced in the state is flared, and without effective infrastructure in-place, no other economically viable choice exists for companies targeting the oil rich Bakken Shale.


Hess To Begin Selling Bakken Natural Gas from Tioga Plant

Winter Weather Delayed Plant Expansion According to Company Officials
Hess' Bakken Acreage Map

Hess’ Bakken Acreage Map

Hess announced in March 2014 that it will begin selling natural gas from its Tioga, North Dakota, plant. According to the company, expansion plans for the plant have been delayed due to poor weather conditions.

In a Reuters article, Hess spokesman, John Roper, said, “due to the unusually harsh winter weather, we’re slightly behind our initial plans, but we expect to start selling residue gas this month.”

The recent upgrade to the Tioga plant includes additions to ethane recovery, full fractionation and sales of natural gas liquids, according to Hess filings with the U.S. Securities and Exchange Commission. At the beginning of the year, the company earmarked $350 million for the expansion of the plant.

According to the North Dakota Industrial Commission (NDIC), in the first part of this year, ~100 wells in North Dakota had to be shut down to reduce flaring. In the liquids-rich Bakken Shale, that resulted in an impact on oil production. The Hess plant expansion could help alleviate the flaring issue, and bring some of the wells back online. The company is hoping to meet revised production estimates of 250M cf/day over the next 12-24 months.

North Dakota’s oil production rose by about 6,500 b/d to about 935,000 bpd in January 2014, Department of Mineral Resources data showed last week. Output in December dropped by 50,000 bpd from the month before.

Hess Tioga, North Dakota Plant Expansion Highlights

  • Hess announced that it would begin selling natural gas from its Tioga, North Dakota plant in March 2014
  • Weather delayed the expansion
  • Hess planning to meet revised production estimates of 250M cf/day over the next 12-24 months

WBI Energy’s Bakken Natural Gas Pipeline Enters Open Season – Dakota Pipeline

$675 million to be spent on 375 mile gas pipeline to Minnesota
WBI Dakota Pipeline

WBI Dakota Pipeline | Click to Enlarge

The open season to secure commitments for WBI Energy’s natural gas “Dakota Pipeline” began on January 30th.

WBI Energy, a subsidiary of MDU Resources, announced plans to build a 400 mile natural gas pipeline at an estimated cost between $650 – 700 million dollars in June 2013. Costs for the project will remain at $650 million, but only cover 375 miles, shaving off 25 miles of pipeline.

[Read more...]

Hess Capital Budget for 2014 Flat in Bakken at $2.2 Billion

Nearly 40% of the Corporate Budget Will Be Spent in the Bakken
Hess' Bakken Acreage Map

Hess’ Bakken Acreage Map

Hess plans on committing nearly half of its $5.8 billion capital budget to unconventional shale resources in 2014, with $2.2 billion slated for development of the Bakken. That’s the same figure Hess earmarked for development spending in the formation for 2013, but the company’s strategic focus is slightly different this year as shale costs shrink.

[Read more...]

Are More Pipelines and Rail Safety Measures Needed in Bakken? – Senator John Hoeven – Video

More Oil Will Move to Rail If Pipelines Are Not Built

As North Dakota approaches the 1-million barrel per day mark, infrastructure for transporting the oil remains a significant concern, with pipelines being one obvious solution.

Concerns sparked by train derailments have also contributed to the need increased safety measures. [Read more...]

Koch Cancels Proposed Bakken Pipeline – Dakota Express Pipeline

Without Adequate Pipeline Infrastructure, Rail is Here to Stay
Bakken Pipeline Map

Bakken Pipeline Map | Click to Enlarge

The “Dakota Express Pipeline”, proposed in June 2013 by Koch Pipeline, will not be built according to a Bloomberg report. The project included a 250,000 b/d pipeline to transport oil out of the Bakken in Western North Dakota to receipt points in Illinois.

Read more: Koch Plans Open Season for Bakken Crude Pipeline to Illinois [Read more...]