Making Hay While the Sun Shines?

More Good News

On top of the news below about the two new natural gas plants in North Dakota, now we get the story that Enbridge will be adding a cryogenic gas processing plant on its Anadarko natural gas gathering system in the Texas panhandle. It should begin operating in the first quarter, 2011, and will have the capacity to handle more than 650 million cubic feet per day. No cost projections were provided.

And this story: CenterPoint will add more gathering of Haynesville shale gas production: the 250 million cubic foot per day expansion of the company's Magnolia system, along with 750 mcfd announced in September, 2009, and currently under construction. These two projects will add 1bcfd capacity. Incredible. All of their projects will increase their capacity fivefold. Yes, incredible.

Original Post

Hess announces plans to expand its natural gas plant in Tioga. At a cost of $325 million, the company wants to increase capacity at this plant from 100 million cubic feet of natural gas daily to 250 million cubic feet. They hope to complete the project by late 2012.

This comes on top of the news that Oneok plans to construct a new 100 million cubic feet per day natural gas plant -- the Garden Creek plant -- in eastern McKenzie County. The project is estimated to cost about $200 million and will double the company's natural gas processing capacity in the Williston Basin. This project is expected to be complete by the end of 2011.

It is possible that these plants are being built because of political necessity. With natural gas prices so low, it  is/was often more economical for oil companies to simply flare (burn) natural gas at the site rather than gather/process it. If I remember correctly, compared to other states, North Dakota may be #1 in flaring, at least in terms of percent flared vs processed. Whether or not that's good for the environment, it certainly is not politically correct, and the state has mandated that companies process much more of this by-product when producing oil.

If the price of natural gas ever rises, these investments will look brilliant. But right now, I think the state regulatory agencies are driving this activity.

For those who understand English as a second language: "making hay while the sun shines," is a proverb that means "if you have an opportunity to do something, do it before the opportunity expires.  In the case of very low natural gas prices and the possibility for better prices, this proverb could not be more timely.

Tioga is in Williams County, about 35 northeast of Williston as the crow flies.

I do not know where the Garden Creek plant will be other than "eastern McKenzie." There is a tributary of the Missouri River called the Tobacco Garden Creek, about 30 miles long), that begins in the badlands south of the Missouri and then meanders to the Tobacco Garden Bay where it joins Lake Sakakawea/the Missouri River.