Western Refining Investing in the Bakken Through Minnesota Refinery

Northern Tier Energy Asset Map

Western Refining has agreed to acquire Northern Tier Energy's general partner from Acon Investments and TPG for total consideration of $775 million.

The acquisition gives Western ownership in an 89,500 b/d refinery in St. Paul Park, MN, an interest in a 455,000 b/d pipeline moving crude from Clearbrook to St. Paul Park, as well as other assets.

More than half of the feedstock used in the St. Paul Park refinery is considered light sweet and "most" of the light-sweet crude comes from the Bakken.

“This investment further enhances our strategic goal of expanding our refining presence in areas with direct pipeline access to cost-advantaged crude oil resources...... Northern Tier Energy’s St. Paul Park refinery is a very successful refinery with pipeline access to cost-advantaged crude oil and refined product regions that historically have generated strong product margins.”

— Jeff Stevens, Western's CEO

The CEO is referencing Bakken oil when he mentioned "cost-advantaged" crude oil. The refinery is strategically placed to benefit from future Bakken production growth.

Northern Tier's Assets Include:

• St. Paul Park Refinery - 89,500 barrels per day refining capacity and processes 100% cost-advantaged crude oil - 75% light, 25% heavy
• Pipeline access to Bakken and Canadian crude oil - 17% interest in a 455,000 barrel per day crude oil pipeline
• Products terminals, storage tanks, rail facilities and Mississippi river dockage
• Retail assets which include the SuperAmerica retail channel
• 163 company operated convenience stores
• 74 franchised convenience stores

Read the full story at jamestownsun.com

NDPA Natural Gas Report - Progress Made in Bakken Flaring Fight

ND Natural Gas Flaring Chart

The North Dakota Pipeline Authority updated its Natural Gas Report at the end of October.

The report is designed to provide factual information on natural gas gathering, processing, and flaring in North Dakota. As you can imagine, it's not as easy as simply selling or flaring natural gas.

A few of the major takeaways include:

• Bakken gas is not dry and has a higher value. It's economic to construct the required infrastructure
• The sale of natural gas in North Dakota is increasing with production
• ~4,700 wells are flaring gas in North Dakota
• 29% of the natural gas produced in ND is flared
• 13% of gas production is flared from wells that are not connected to pipelines and 16% of production is from wells connected to inadequate infrastructure
• Over 2,400 miles of pipe were placed into service in 2012 alone
• Growth in the number of wells flaring gas is slowing
• NGLs fall out of the production stream and reduce the flow of gas in pipelines
• Processing capacity is expected to grow from 1 Bcf/d today to 1.45 Bcf/d in the next few years
• An interstate natural gas pipelines is likely needed
• ND accounts for a small percentage of natural gas flared in U.S. history

Download the full report at ndpipelines.com

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

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."

Bakken Oil & Gas Might Follow Allete's Transmission Line Right-of-Way

Allete Bakken Right of Way

Allete announced plans to turn a 465-mile DC transmission line right-of-way into a shared right-of-way that could be used for pipelines.

Pipelines moving oil, natural gas, petroleum products, water, or carbon were mentioned as possibilities.

The first order of business will be establishing an extension 60 miles west into the producing region of the Williston Basin and the Bakken Shale.

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Allete DC Transmission Line Map

Governor Jack Dalrymple supports the project and the creative solutions it might offer in reducing Bakken flaring.

"The ALLETE Energy Corridor is a breakthrough opportunity to reduce flaring by locating a major natural gas pipeline from the Bakken to eastern markets," Gov. Jack Dalrymple said. "While the corridor would support the transfer of many energy resources, it could also carry carbon dioxide from coal-fired power plants to western North Dakota for use in advanced oil recovery."

“We see the ALLETE Energy Corridor as a comprehensive infrastructure solution in North Dakota that could serve many products and producers across the region,” said ALLETE CEO Alan R. Hodnik. “We value Gov. Dalrymple’s support of our vision and appreciate him bringing it forward to other members of the state’s energy sector.”

Read the full press release at allete.com

Tesoro Delivers First Bakken Oil Unit Train to Northern California Refinery

Tesoro Refinery Map - Golden Eagle Refinery Highlighted

Tesoro Corp delivered its first unit train carrying Bakken crude to Golden Eagle Refinery in Northern California last week.

Tesoro built a unit train unloading facility that allows the company to process Bakken barrels for the first time in Northern California.

The refinery is primarily supplied by Alaskan and foreign crude. Tesoro refines Bakken crude at the company's Mandan Refinery in North Dakota, the Anacortes Refinery in Washington, and now the Golden Eagle Refinery in California.

Tesoro's refinery in Mandan, ND, is running price advantaged Bakken crude at full capacity of 70,000 b/d.