Enterprise Seeks Commitments for Bakken-Cushing Oil Pipeline

September 10, 2014 Kirk Eggleston

Enterprise Products Partners L.P. began a binding open commitment period in early Sept. of 2014 to determine shipper demand for capacity on a proposed new pipeline from the Williston Basin of North Dakota to the Cushing hub in Oklahoma. The 30-inch diameter, 1200-mile pipeline is expected to have an initial capacity of approximately 340,000 b/d of crude oil, expandable to more than 700,000 .

Company officials say the Bakken-to-Cushing pipeline would also serve the Powder River and Denver-Julesburg (“DJ”) Basins, and have the capability to transport up to six grades of crude oil and products, including Rockies Condensate and Processed Condensate. Subject to sufficient customer commitments, the pipeline is expected to begin service in stages, starting with the DJ-to-Cushing portion in the fourth quarter of 2016, and should be fully operational by the third quarter of 2017.

“This pipeline offers a reliable, safe, and economical solution that promotes continued development of some of our nation’s most prolific producing areas and reduces the need for imports of crude oil,” said A.J. “Jim” Teague, EVP and COO of Enterprise’s general partner. “By leveraging the capabilities of our existing midstream network, the Bakken-to-Cushing pipeline would provide flow assurance and market choice. At Cushing, shippers would have access to one of the most liquid crude oil trading hubs in the world, as well as a comprehensive network of storage and pipelines serving the U.S. Gulf Coast refining complex and waterborne transportation options.”

Pembina Acquires Bakken Midstream Assets - $650 Million

September 3, 2014 Kirk Eggleston

Pembina Pipeline Corp. announced in early Sept. 2014 it will acquire Bakken midstream assets for $650-million from entities affiliated with Riverstone Holdings, LLC.

The deal includes the Vantage pipeline system, which carries up to 40,000 b/d of natural gas liquids from the North Dakota Bakken to Alberta, where it is connected to the Alberta Ethane Gathering System pipeline. Also included the deal are Mistral Midstream Inc's interest in a Saskatchewan ethane processing plant. The plant is expected to produce 4,500 b/d of ethane, and it will connect into Vantage system through a pipeline lateral that is also currently under construction. The deal is expected to close in the fourth quarter of 2014.

Pembina anticipates additional capital expenditures of approximately $91.5-million (net to Pembina) prior to the end of 2015 in connection with the Transaction in order to complete the construction of the ethane processing plant and the associated gathering and delivery system.

In addition to the Bakken acquisition, the company also announced plans to build a 37,500 b/d propane export terminal in Portland, Oregon, for $500-million. The facility is expected to be in service by 2018.

Quantum Energy, Inc. Secures Two Bakken Refinery Sites

August 29, 2014 Kirk Eggleston

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.

“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.”

— Quantum President Stan Wilson

Hess to form MLP for Bakken Midstream Assets

August 22, 2014 Kirk Eggleston

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.

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

June 13, 2014 Kirk Eggleston

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.

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.”

— 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.