Why I Love To Blog -- Incredible Timing, November 19, 2013 -- A Must Read: ONEOK Announces 7th NGL Processing Plant In The Bakken; Another ~ $Billion Investment In The Bakken

For quite some time I have mentioned that we won't see a decrease in flaring until we see an increase in natural gas processing capacity.

In fact, yesterday, I wrote a very, very long post on exactly that subject: suggesting it was not a shortage of pipeline to wells, but a shortage of natural gas processing plants and capacity. 

I suggested that the operators had done their part, putting their wells on natural gas pipelines, but the "system" had let them down by not providing adequate natural gas processing coverage.

When I wrote that post, I also did not know (and could not find) the status of the ONEOK Bakken NGL pipeline.

A reader just sent me the following story. One word: I.N.C.R.E.D.I.B.L.E.

From an ONEOK press release:

ONEOK today announced plans to invest approximately $650 million to $780 million between now and the second quarter 2016 to:  

• Build a new 200-million cubic feet per day (MMcf/d) natural gas processing facility – the Lonesome Creek plant – and related infrastructure in McKenzie County, N.D., in the Bakken Shale in the Williston Basin; the Lonesome Creek plant is the partnership's sixth new natural gas processing plant built in the region since 2010 and seventh plant overall; and
• Complete a second expansion of the Bakken NGL Pipeline, which will increase the pipeline's capacity to 160,000 barrels per day (bpd) from 135,000 bpd.

Flashback. Back on April 26, 2013, the question was asked where the next natural gas processing plant would be built. The opinions then:

• northeast McKenzie County, in Watford City area: 36%
• on the Fort Berthold Indian Reservation: 12%
• just off the reservation, to the west: 10%
• western Mountrail County, in the Stanley area: 24% (MDW voted this choice)
• in Whiting's Pronghorn Prospect, Stark County: 17%

I don't know where "Lonesome Creek" is but KXNET is reporting that the plant will be twelve (12) miles west of Watford City. That is in McKenzie County, right on the highway, and in an very active area:

See first comment; I brought that comment up here because comments are not "searchable." That comment:

Not sure if this matters at all but approximately 12 miles west of Watford City would be just 4 miles west of Arnegard and this is where the Northern Border NG Pipeline crosses US Highway 85 running from northwest to southeast. May be just a coincidence. 

According to wiki: 

Northern Border Pipeline is a natural gas pipeline which brings gas from Canada through Montana, North Dakota, South Dakota, Minnesota, and Iowa into the Chicago area. It is owned by TC PipeLines, LP and ONEOK Partners and is operated by TC PipeLines, LP .

I will correct the location if given better data.

So, to update, the ONEOK natural gas processing plants:

• Grasslands Facility (McKenzie County, built prior to 2006; expanded in 2008)
• Garden Creek I
• Garden Creek II
• Garden Creek III
• Stateline I
• Stateline II
• Lonesome Creek (the sixth one since 2010)

The Garden Creek plants are co-located northeast of Watford City.

The Stateline plants are west of Williston.

Operators In The Area

Triangle USA Petroleum
XTO Energy, Inc
KOG Oil & Gas
Slawson Exploration
Zenergy, Inc

More On This Announcement

From the press release (linked above):

The new Lonesome Creek plant is expected to cost approximately $320 million to $390 million.  When complete, the new plant will be the partnership's largest natural gas processing plant in North Dakota and will increase the partnership's total natural gas processing capacity in the state to approximately 800 MMcf/d. 

In addition to the Lonesome Creek plant, ONEOK Partners also expects to invest approximately $230 million to $290 million for related expansions and upgrades to its existing natural gas gathering and compression infrastructure.  The Lonesome Creek plant and related infrastructure are expected to be completed by the end of 2015 and will be supported by acreage dedications from producers.

To accommodate NGL volumes produced from the new Lonesome Creek plant, ONEOK Partners expects to invest an additional $100 million to increase capacity on its Bakken NGL Pipeline, an approximately 600-mile pipeline completed in April 2013 that transports unfractionated NGLs produced in the Williston Basin to the partnership's 50 percent-owned Overland Pass Pipeline.

From the KXNET link above:

ONEOK currently processes 50 percent of the natural gas in the Bakken, 30 percent of that is being flared right now, but once this new plant is up and running the company plans to reduce that number to 10 percent.

They're also investing in an expansion to their Bakken NGL Pipeline.

"Spending about 100 million dollars just on that pipeline expansion itself where we'll be looping the pipeline to increases it's capacity from an expected 135,000 barrels per day to 160,000 barrels per day," Spencer said.

The plant will be located 12 miles west of Watford City and is expected to be complete by the end of 2015.

North Dakota's Natural Gas Infrastructure

A PDF.

There are in fact three Bear Paw/ONEOK plants in this document (p. 9): one at Lignite, Burke County, and one at Marmarth, Slope County, plus one more, the Grasslands facility in McKenzie County. The Grasslands (McKenzie) facility appears to be in the same area as the newly announced facility.

A map in this document shows nicely the Northern Border Pipeline mentioned by a reader above.