Posted on 07/01/2014 6:02:02 AM PDT by thackney
North Dakota Gov. Jack Dalrymple is full of gratitude for pipeline infrastructure investments after tasking midstream companies two years ago to build pipelines, and build them quickly. Dalrymple hosted his second Governor’s Pipeline Summit in Bismarck on June 24, bringing together about 150 pipeline industry leaders, energy industry representatives and federal, state and local officials to share their response to the rapid construction of thousands of miles of pipelines to meet oil and gas industry demands.
“There was a time a few years ago when we said we’re never going to have enough pipelines to deal with this boom,” Dalrymple said at a press conference following the summit. “The assumption was you couldn’t possibly build out enough capacity or redirect existing capacity easily enough to deal with the situation. We learned today that not only have we done that but we will continue to do that.”
Dalrymple said the efforts of midstream companies are “remarkable” and the state can begin to see how pipeline capacity and transport could someday equal production.
“I want to say ‘thank you very much’ for the incredible progress made over the last two to four years,” Dalrymple told industry leaders. “You’ve essentially more than doubled the pipeline capacity, and now we look ahead and see the opportunity to increase it another 50 percent, and possibly more.”
Though rail has played a critical role in moving oil from the Bakken to various refinery markets, he said the state is still looking for the safest and most efficient way to transport crude.
“I look forward to the day when pipelines are providing a large percent of that capacity,” Dalrymple said. “And when takeaway capacity will move into a competitive environment and those with the best opportunities to transport will prevail.”
An answer to the call
Two years ago, Dalrymple told industry leaders who attended the first summit that “you can’t go too fast in getting the gathering systems built, getting the pipelines hooked together, getting them operational. There is no single thing that I can think of that can do more to reduce the human impacts of rapid oil development than pipelines.” Pipeline companies apparently took it to heart because by the end of 2014, the state’s capacity to ship crude oil to market by pipeline is expected to increase to 783,000 barrels per day. Only five years ago, the state’s total crude oil pipeline capacity totaled 286,000 barrels per day. Pipeline and refinery projects that are proposed for completion by late 2016 could more than double the state’s current oil takeaway capacity to about 1.4 million barrels per day.
“That’s huge progress in a very short period of time,” Dalrymple said.
Director of the state’s Pipeline Authority Justin Kringstad said developing pipeline infrastructure has been “a game of catch-up” but the industry has learned a lot in recent years and is not as concerned about stranded barrels as it is about reaching key markets.
“With refining markets … the Great Lakes markets are saturated by North Dakota and Alberta, so now how do we get to the coasts, as there is no pipeline access to those currently,” Kringstad said. Prices for crude oil are better on the coasts, but he said new energy developments in Texas and California could affect the markets and change the pricing landscape in coming years.
Gas gathering needs
The industry is also working to expand existing natural gas gathering systems to avoid flaring with a preliminary goal of capturing 74 percent of the gas by the end of 2014 and ultimately capturing 90 to 95 percent by 2020. The number Kringstad highlights as an important statistic to battle is the 19 percent of wells that are already connected, but are still flaring due to capacity issues. Dalrymple also addressed the flaring issue and said the new gas capture plans that went into effect on June 1 which require operators to submit a plan for capturing the natural gas prior to obtaining a drilling permit are already helping midstream companies plan for additional gathering lines.
“We will reduce flaring in North Dakota, it’s just that simple,” he said. “We are catching up, and we will catch up. All of industry is committing to working with us to make this happen.”
Oneok Vice President Kevin Burdick said as more time passes the industry understands the results of wells more clearly and can plan accordingly.
“We’re able to communicate that to the market that some investments will generate the returns we say they will,” Burdick said. “Becoming more predictable is normal evolution to a play like this.”
A wake-up call spurs greater safety measures
A pipeline technology working group was formed by the governor earlier this year that plans to identify the latest available technologies for enhanced monitoring and control of oil and gas pipelines, and the group is expected to have a report available in the next few months for policymakers to review. Dalrymple said the working group is another way to provide solutions to the challenges of pipeline breaks and leaks, particularly after the Tesoro pipeline leak that spilled more than 20,000 barrels of Bakken oil onto farmland in late September. “That big spill was a big wake-up call for us,” Dalrymple said. “We’re working hard to determine what technology belongs on these various kinds of pipelines.”
The working group is looking at the technology options for greater protection against spills, but he said it remains to be seen what the state will actually require of companies. Whatever safety regulations may be put into place, Dalrymple believes North Dakota will lead the rest of the nation in regard to this issue (see related safety story on page 1).
“This ties in with the whole state’s role in overseeing pipeline safety,” Dalrymple said. “Is there something incremental that we should be doing above and beyond what the feds are doing? I think there’s an opportunity to take advantage of technology.”
Representatives from the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration are also part of the working group, and with their help he said he is “optimistic that we can come up with something worthwhile.”
ND ping
Who are the builders of the pipelines and pipeline components?
Some recent examples:
Energy Transfer Partners said Wednesday it is moving ahead with plans to build a 1,100-mile crude pipeline between North Dakota fields and the oil hub in Patoka, Ill. It could move as much as 320,000 barrels a day to refineries in the Midwest, travel by rail to East Coast plants or be loaded into another pipeline to the Gulf Coast.
North Dakota’s Bakken Oil Fields to Get New Pipelines
http://online.wsj.com/articles/north-dakotas-bakken-oil-fields-to-get-new-pipelines-1403810341
Separately this week Enterprise Product Partners L.P. said it hopes to build a 340,000-barrel-a-day line from Stanley, N.D., to the crude oil-storage hub at Cushing, Okla.,
A third line, previously announced by Enbridge Energy Partners was approved Wednesday by North Dakota regulators. The company can begin construction on the 600-mile Sandpiper pipeline as soon as July 1. That $2.6-billion project, scheduled to move oil from North Dakota to Clearbrook, Minn., starting in 2016, will have a capacity of 225,000 barrels of oil a day. From the Clearbrook oil terminal to another oil hub in Superior, Wis., that pipeline will have a bigger capacity of 375,000 barrels a day.
Those are MLPs that own and use the pipelines. Do they manufacture the pipe and construct the line also or do they contract other firms for that?
The operating companies basically only operate. They hire companies like the ones I have worked for to engineer and construct their pipelines and associated facilities.
They or their contractors will then purchase from manufactures the equipment and material to build the pipeline and associated facilities.
They do not even own the oil or gas moving in them. They really operate like a trucking company or railroad. Someone else hires the pipeline company to move their product.
Which (publicly traded hopefully) companies do the manufacturing and construction? Are they large firms or do they tend to be smaller privately held businesses?
You are talking about hundreds of different companies involved in this type of work.
That’s what I was wondering, if it was many small outfits or a few large ones such as Flour, Trinity, Foster Wheeler, Bechtel, etc.
There are many small outfits that would be a part of this as well as larger firms. The ones you list might be part of it but it tends not to be their focus. Trinity I don’t know but the others have more focus towards downstream, chemplants and less in the midstream.
Keep in mind, this isn’t some big change in the industry but just more of the same. Far more work going on in Texas.
Thanks for the ping!
Lots of good effort is made by US companies to find and extract oil and natural gas. Keep up the good work. But something keeps knawing at me that we’re getting ripped off. Of interest is that various reports say that the United States is exporting much of this oil. In my thinking the oil belongs to the state, of orgin, and also belongs, in part, to the United States as the country, of orgin. Why in the world are we letting this national treasure out of our country when we are suffering from $3.80+ per gallon gasoline and $4/gal LP gas? How can we get the US to stop importing oil and use what we have have?
We export almost no oil. What little we do export is typically to the closest refinery in Canada.
In my thinking the oil belongs to the state, of orgin, and also belongs, in part, to the United States as the country, of orgin.
That sounds like a communist line of thinking to me. Why would private mineral owners, and private production companies not have full ownership of their commodities? Do you think this about any other products? Should the results of your labor be controlled by others just because they want it?
Why in the world are we letting this national treasure out of our country when we are suffering from $3.80+ per gallon gasoline and $4/gal LP gas?
And what do you think is paid around the world? Do you think those that invest in production in the US should be paid less than those that invest in Qatar, Brazil or Canada? What do you think would happen to the US production rates if that was forced upon them by government?
How can we get the US to stop importing oil and use what we have have?
Exporting our expensive, light sweet oil while importing cheap heavy sour oil for use in the refineries that already spent billions upgrading so they could do sounds smart to me.
(That sounds like a communist line of thinking to me.)
It kinda does to me too, sorry. It’s a frustration with having to pay so much for what we have so much of. My economics may be poor but I’d like to see prices go down.
(We export almost no oil. What little we do export is typically to the closest refinery in Canada.)
According to wikipedia; the United States exports about 1.5 million barrels per day based on data from 2012.
First mistake, in my opinion.
the United States exports about 1.5 million barrels per day based on data from 2012.
They are likely lumping together petroleum products made from crude oil, pretending it is oil.
Reality is we import more crude oil than we need ourselves, use a refinery surplus to make higher value products and export what we do not use ourselves.
This keeps more jobs in the US, keeps more refinery capacity in the US and helps our trade balance.
Crude Oil Exports by Destination
http://www.eia.gov/dnav/pet/pet_move_expc_a_EPC0_EEX_mbblpd_m.htm
The net is what is important, we net export about 1.6 million bpd of products.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTPNTUS2&f=M
But the crude oil net is over 7 million bpd imports.
http://www.eia.gov/dnav/pet/pet_move_neti_a_epc0_IMN_mbblpd_m.htm
I was at the doc's office yesterday and TIME mag also had a similar boo-hoo article on the "dangers" of shipping oil by rail. Their solution? almost always, just stop doing it, when Keystone, et al are staring them in the face. The agenda is so blatant, yet people still buy into their crap.
How many barrels per day of Williston Basin oil will Keystone XL transport? Is Keystone important for the Bakken, or will other pipelines quickly pick up the slack if it is not built?
The Keystone XL is primarily for bringing in oil/bitumen from Canada. Some capacity capacity (100 out of 850 kBPD, if I remember) was reserved for it.
But keep in mind, Keystone XL doesn’t even go through ND, although it is close to the SW corner.
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