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Bakken Midstream Year-in-Review

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As of North American Oil & Gas Pipeline’s January deadline, the current active drilling rig count in North Dakota was 58, a far cry from 165 at the same time in 2015 and the 200 in 2012, but despite oil prices taking a dive and rig counts dropping, the midstream market is staying busy in the Bakken shale play.

In December 2015, Platts Bentek reported that oil production from key shale formations in North Dakota remained relatively flat in November versus October. Crude oil production in the North Dakota section of the Bakken shale formation of the Williston Basin dipped by less than 1 percent month-over-month in November, marking the fifth consecutive month of marginal decline that began in the summer.

According to Sami Yahya, Bentek energy analyst, the average crude oil production from the North Dakota section of the Bakken in November was 1.1 million barrels per day (bpd), about 3 percent lower than year ago levels.

“Assuming current drilling rates, crude production in the Bakken can grow by as much as 200 thousand barrels per day and reach 1.4 million bpd by mid-2017 if producers completed 5 percent of the backlogged wells starting in June of 2016,” Yahya said.

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In early 2016, the North Dakota Public Service Commission approved a siting permit for Sacagawea Pipeline Co.’s $125 million, 70-mile, Sacagawea Pipeline Project. The pipeline has a maximum capacity of 200,000 bpd with a normal throughput of 140,000 bpd. The project is being developed to deliver crude oil from various points south of Lake Sacagawea in and around the area commonly referred to as Johnson’s Corner and Keene, in McKenzie County, North Dakota — approximately 65 miles southeast of Williston — to destinations with takeaway options for both rail and pipe in Palermo and Stanley, North Dakota.

The proposed 16-in. pipeline will originate at Paradigm Midstream Service’s Keene Crude Oil Terminal and end at the Phillips 66 Partners Palermo Rail Terminal Facility. The Palermo and Stanley destinations will provide the flexibility to deliver volumes at the shipper’s option to the Palermo Rail Facility as well as the Stanley Terminal.

Sacagawea Pipeline Co. is a joint venture Paradigm Energy Partners, Phillips 66 Partners and Grey Wolf Midstream.
Notable midstream news from the Bakken region in 2015 includes:

Tesoro to Acquire Bakken Assets

In early December, San Antonio Texas-based Tesoro Corp. announced that it would acquire Great Northern Midstream LLC, whose assets include the 97-mile BakkenLink crude oil pipeline.

Great Northern Midstream owns and operates, recently constructed crude oil pipeline, gathering system, transportation, storage and rail loading facilities in the Williston Basin of North Dakota.

The BakkenLink pipeline connects to several third-party gathering systems, as well as a proprietary 28-mile gathering system in the core of the Bakken, supported by acreage dedication. In addition, the transaction includes a 154,000 bpd rail loading and a 657,000 barrel storage facility in Fryburg, North Dakota, which can provide outbound deliveries to the West, East and Gulf Coasts.

Bakken System Commences Operations

In August, American Midstream Bakken’s Bakken Crude Oil Gathering System commenced operations. The approximately 50-mile crude oil pipeline is located in the core of McKenzie County, North Dakota and has a design capacity of up to 40,000 bpd of crude oil for delivery to major intra- and interstate pipeline systems.

Hess Announces Bakken Midstream JV

In June, Hess Corp. announced that it would combine forces with Global Infrastructure Partners to create the Hess Infrastructure Partners joint venture.

A natural gas processing plant in Tioga, North Dakota; a rail loading terminal in Tioga and associated rail cars; crude oil truck and pipeline terminal in Williams County, North Dakota; propane storage cavern and rail and truck transloading facility in Mentor, Minnesota; and crude oil and natural gas gathering systems in North Dakota are the Hess midstream assets to be included in the joint venture.

Sunoco Logistics Partners Participating in Bakken Pipeline Project

In May, Sunoco Logistics Partners announced that it reached an agreement with Energy Transfer Partners (ETP) to take a 40 percent stake in Bakken Holdings Co., which is developing the Dakota Access Pipeline and Energy Transfer Crude Oil Pipeline projects.

The project consists of existing and newly constructed pipelines that are expected to provide aggregate takeaway capacity of approximately 470,000 bpd of crude oil from the Bakken/Three Forks production area in North Dakota to key refinery and terminalling hubs in the Midwest and Gulf Coast including the Partnership’s Nederland terminal.
Enable Midstream Completes Bakken Crude Oil Gathering System Enable Midstream Partners LP announced April 20, that its first crude oil and produced water gathering system in North Dakota is fully operational.

The Bear Den Crude & Produced Water Gathering System began construction in August 2013 with the initial segments of the system starting service in November 2013. It provides services to producer XTO Energy Inc. in its Little Missouri Field and will have a maximum throughput of 19,500 bpd.

Kinder Morgan Pays $3 Billion for Hiland’s Bakken Midstream Assets With one move, Kinder Morgan Inc. added 1,225 miles of crude oil gathering pipelines and 1,800 miles of gas gathering pipelines in the Bakken shale region.
Kinder Morgan announced Jan. 21 a definitive agreement to acquire Hiland Partners from its founder, Harold Hamm, and certain Hamm family trusts, for a total purchase price of approximately $3 billion, including the assumption of debt.

Hiland’s assets consist of crude oil gathering and transportation pipelines and gas gathering and processing systems, primarily serving production from the Bakken formation in North Dakota
and Montana.

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