Koch Cancels Proposed Bakken Pipeline - Dakota Express Pipeline

January 22, 2014 Kirk Eggleston

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.

With production in the Bakken, nearing 1 million b/d, the need for pipelines is only increasing. Although it is not known why the company decided to axe the project, Company Spokesman, Jake Reit, did confirm the decision to Lynn Doan with Bloomberg, saying:

"the non-binding open season for the Dakota Express Pipeline is no longer being pursued"

Pipeline companies prefer to have long-term, binding commitments for capacity. If commitments do not reach a certain point, the project will be called off. As a very loose rule of thumb, pipeline companies look for commitments of 60% or more of designed capacity before they move forward. In this case, that could mean Koch failed to receive commitments for 150,000 b/d.

This isn't the first proposed pipeline to get canceled: Oneok canceled plans for the Bakken Crude Express Pipeline in late 2012.

The Koch cancellation is surprising considering there is more than 500,000 b/d of oil moving by rail out of the basin today.

Bakken Oil Express Pipeline Approved by the North Dakota PSC

January 6, 2014 R.T. Dukes

The North Dakota Public Service Commission (PSC) approved the siting permit for the Bakken Oil Express Pipeline between Killdeer and Dickinson. With the permit, construction can begin immediately.

The pipeline is expected to cost $14 million and replace as many as 825 tanker trucks per day on Highway 22.

The 16-inch, 38-mile pipeline will have capacity to move 165,000 b/d and could be built in as little as 12 weeks. The line will originate at a truck unloading and pumping facility near Killdeer and deliver oil to the existing Bakken Oil Express rail facility near Dickinson.

View the full news release at psc.nd.gov

Enbridge's Sandpiper Pipeline Gains Anchor Shipper in Marathon Petroleum - Open Season

November 26, 2013 R.T. Dukes

Enbridge Partners announced it has reached an agreement with Marathon Petroleum to become an anchor shipper on the Sandpiper Pipeline.

The Sandpiper Pipeline is a 225,000 b/d oil pipeline that will run 375 miles from Beaver Lodge, North Dakota, to Clearbrook, Minnesota. The project also includes a 30-inch, 233-mile pipeline extension from Clearbrook, Minnesota, to Superior, Wisconsin.

Marathon will fund 37.5% of the pipeline and gain a 27% interest in Enbridge's North Dakota System. The project has an estimated cost of $2.6 billion and is expected in service in the first quarter of 2016.

“The Sandpiper Project provides much needed pipeline capacity to enable rapidly growing Bakken crude oil production.......” said Stephen J. Wuori, president. “We are delighted to welcome Marathon Petroleum as both a committed shipper and a partner. Their shipping commitment demonstrates the economic attractiveness of establishing a low-cost reliable pipeline solution for Bakken producers to access the premium North American markets for light crude oil.”

An open season for the pipeline starts at 12 pm MST on November 26, 2013 and ends at 5 pm on January 24, 2014.

Read the full press release at enbridgepartners.com

Oneok Investing More In Bakken Midstream Infrastructure

November 20, 2013 R.T. Dukes

Oneok is planning another $650-780 million in infrastructure investments in the Bakken.

The company will expand its Bakken NGL Pipeline, expand gathering & compression in the area, and build a seventh NGL processing plant in McKenzie County, ND.

Oneok will spend $100 million to expand the Bakken NGL pipeline that came online in April of 2013. The pipeline was originally planned with capacity of 60,000 b/d and is currently being expanded to 135,000 b/d. This will mark the second expansion and grow capacity to 160,000 b/d.

The Lonesome Creek processing plant (200 mmcfd) will have a price tag of $320-390 million and the expansion of gathering infrastructure is estimated to cost $230-290 million.

“Production in the Williston Basin continues to increase with no signs of leveling off or slowing,” said Terry K. Spencer, president. “The new Lonesome Creek plant and related infrastructure will be well-positioned to capitalize on existing ONEOK Partners assets and provide producers in the area with essential natural gas processing capacity....”

Oneok will have approximately 800 mmcfd of processing capacity in North Dakota when the Lonesome Creek Plant is completed.

Three of the seven planned plants are yet to be completed. The Garden Creek II and III are under construction and ground will be broken on the Lonesome Creek Plant soon.

Grasslands (90 mmcfd)
Garden Creek I (100 mmcfd) online December 2011
Stateline I (100 mmcfd) completed September 2012
Stateline II (100 mmcfd) expected April 2013
Garden Creek II (100 mmcfd) expected completion Q3 2014
Garden Creek III (100 mmcfd) expected completion Q1 2015
Lonesome Creek (200 mmcfd) expected in late 2015

Crestwood Midstream Acquires Arrow Midstream for $750 Million - Expanding Bakken Footprint

October 10, 2013 R.T. Dukes

Crestwood Midstream is acquiring Arrow Midstream for $750 million. The deal will make Crestwood Midstream one of the largest Bakken midstream companies. The deal builds on the recent acquisition of Inergy Midstream that closed on Monday, October 7th.

“We are very excited about the addition of the Arrow assets to Crestwood’s rapidly expanding crude services business and our Bakken Shale footprint,” stated Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner. “.....The Bakken Shale is a core area for our future growth, and by extending our platform upstream of COLT, Crestwood will be expanding and optimizing the full suite of liquids value chain services we can provide for both our producer and demand-side customers.”

Arrow Midstream's assets are located on the Fort Berthold Indian Reservation and include:

150 miles of crude oil pipelines moving 50,000 b/d
160 miles of natural gas gathering lines moving 15 mmcfd
150 miles of water gathering lines moving 8,500 b/d
Saltwater disposal wells
Central delivery point with multiple pipeline outlets
Automate truck loading facility

The assets are supported by operator commitments from 150,000 acres in Dunn and McKenzie counties. Current and future plans call for the expansion of capacity to 125,000 b/d of oil, 100 mmcfd, and 40,000 b/d of water.

After the close of this transaction, we will be one of the largest Bakken midstream service providers servicing approximately 18% of current total Bakken crude oil production. Nationwide, we will be handling over 470,000 Bbls/d of crude oil and NGLs in addition to over 2 billion cubic feet per day of natural gas through our gathering systems and transportation assets."