- Associated Press - Sunday, November 22, 2015

MINOT, N.D. (AP) - The drilling of new oil wells has slowed in the Bakken, but construction of pipelines hasn’t followed suit.

“We have had a really busy year with pipeline applications,” North Dakota Public Service Commissioner Julie Fedorchak told the Minot Daily News (https://bit.ly/1ltuDNh ). “Considering the drilling activity is down, what we are seeing in terms of investments by companies in the pipeline infrastructure really indicates that they are investing for the long term here and seeing a need for this infrastructure to develop this resource for many years.”

Through Oct. 20, the Public Service Commission had received 15 pipeline applications for review. About half have received approval already and are moving forward. Most of the projects involve moving crude oil. A few relate to natural gas and one to ethane. The total number of applications compares to 12 in 2014, several of which were storage tanks associated with pipelines.

The last large project introduced in the state was the Dakota Access Pipeline, which came before the PSC at the end of 2014. That pipeline would extend for 300 miles, starting in Stanley and going west to gather oil through the Bakken region before exiting into South Dakota, southeast of Bismarck. Proposed by Energy Transfer Partners, it is projected to transport 450,000 barrels a day once it comes online in 2017.

Enbridge’s Sandpiper also is expected to come online in 2017 with a capacity of 225,000 barrels a day, and TransCanada Upland would carry up to 220,000 barrels a day beginning in 2020. Both the Sandpiper and TransCanada Upland still have regulatory approvals to get.

Sandpiper has approval from the North Dakota PSC and has begun construction on two 150,000-barrel oil storage tanks south of Tioga at Beaver Lodge. It has started groundwork on 55,000-barrel and 80,000-barrel tanks at Stanley and a 300,000-barrel tank at Berthold. Enbridge spokeswoman Katie Haarsager said construction will halt over winter and resume in the spring. Next year, Enbridge plans construction on a pump station south of Lakota and expects to start pipeline construction next year if approvals are granted in Minnesota and Wisconsin.

The Sandpiper Pipeline will connect the company’s Beaver Lodge Station, south of Tioga, and a new Clearbrook, Minnesota, terminal with 24-inch diameter pipeline. A 30-inch diameter pipeline will connect Clearbrook to the company’s terminal in Superior, Wisconsin. In total, the project extends for about 616 miles.

The North Dakota portion will be constructed in three or four segments, with work going on simultaneously, Haarsager said. Work is expected to finish first in the west and wrap up in the state in the east.

Justin Kringstad, director of the North Dakota Pipeline Authority, said the industry is assessing its next move beyond construction of Dakota Access, Sandpiper and TransCanada Upland.

“Most of the discussion that is currently taking place today is trying to figure out how growth is going to develop, given today’s low oil price environment and what that may do to longer production expectations and what other projects may be necessary to move the crude oil,” he said. “There’s a lot of work going on right now on what the need will be, what type of volume there will be and the timeline.”

Fedorchak said North Dakota pipeline capacity increased from 723,000 barrels per day in 2014 to 827,000 barrels per day in 2015. Projects completed this year will bump that capacity up slightly to 850,000 barrels per day. If proposed projects stay on schedule, North Dakota’s take-away capacity could be 1.5 million barrels per day by the end of 2017, she said.

Fedorchak said most of the pipelines being sited now are in core areas where production is high.

“The requests we are seeing are pretty strategic,” she said.

Williams and McKenzie, which are at the epicenter of current oil development, along with Divide and Mountrail County, are seeing the most pipeline activity. A number of the pipelines proposed this year have been shorter lines connecting a gathering area to rail or export pipelines, Fedorchak said.

The PSC also has received some pipeline conversion requests, particularly for converting crude oil pipelines to natural gas liquids lines. There have been requests to convert existing gas lines to natural gas liquids and to convert gathering lines to transmission lines.

On the natural gas side, the focus has been on constructing gathering pipelines and pipelines to processing facilities, Kringstad said. Most of the natural gas being flared is at wells with pipelines, and that is because the pipelines are not big enough, he said. So the focus has been on either running a second pipeline, building new compressor stations to move natural gas more quickly through the pipeline or increasing line maintenance to ensure an efficient gas flow.

Fedorchak said the commission isn’t seeing landowner resistance to the smaller pipeline projects. The pipelines have a positive impact in reducing the truck traffic running from gathering facilities to rail facilities, she said.

Larger projects generate more public comment. To ease the pressure from an increasing number of pipelines, the state has encouraged companies to consider a corridor concept in which multiple pipelines are built in a common “corridor” through an area.

“Companies are doing that as much as they possibly can,” Fedorchak said. “It appears as if they are really working to use some of those established corridors and footprints that have already been impacted.”


Information from: Minot Daily News, https://www.minotdailynews.com

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