Natural Gas Pipeline Expansion in North Dakota

Williston Basin Pipeline Company (a subsidiary of MDU) announced today (May, 2010) plans to expand its existing natural gas pipeline capacity by approximately 33 percent in the Bakken production area in northwestern North Dakota. The proposed expansion would add up to 30 million cubic feet per day to existing volumes from the Bakken production area for delivery to Northern Border Pipeline. The expansion project is expected to begin November, 2011.  (The URL suggests this link my break or point to another story in the future.)

The price of natural gas is very, very low, but yet I keep seeing many, many stories on activity in the natural gas arena.

It doesn't take a rocket scientist to see that there are some folks that think investing in natural gas "today" is going to pay off nicely in the future.

Some things to consider:

1. No matter how much folks talk about "green" power (wind and solar), the fact remains, both of these "renewable" sources will play a marginal role in energy production in the US for the next several decades.

2. That leaves two choices: carbon and nuclear. The carbon choices are coal, natural gas, and/or oil. Without political intervention, coal would remain the least expensive, but sooner or later, the odds are that coal will become more expensive. Oil is good for transportation but it's not going to be used to generate electricity. That leaves natural gas and nuclear energy to generate electricity.

3. The current administration backs increased nuclear power and there are big players advocating nuclear power. These big backers include Bill Gates and General Electric. So, one would think that the expansion of nuclear power is a no-brainer. But the American public is skittish and unpredictable. It's one thing for an oil rig in the Gulf of Mexico to implode/explode resulting in a catastrophic oil spill; it's another thing for a nuclear power plant to implode/explode resulting in a catastrophic nightmare. And that's the rub.

4. US electricity needs will continue to increase over the next decades, partly because of the electric cars about to hit the market. Something is going to be needed to generate that electricity, and there appear to be some folks who think it will eventually be natural gas.

On a completely different note regarding the increased natural gas activity in North Dakota. It has been common practice for oil companies to flare off natural gas in North Dakota. I believe I read somewhere a year or so ago, that North Dakota ranked #1 among states, and western nations, in flaring of natural gas. The state finally stepped in and mandated that oil companies limit their oil production from any well flaring natural gas, until the flaring was eliminated or minimized. Obviously this regulation requires that natural gas pipeline capacity be increased. Obviously the regulation plays a role, but I still think there is more going on in the natural gas arena than meets the eye.

Final comment: This really is a big deal. One starts to get used to all these press releases, it is easy to lose sight of the big picture. In this case, Williston Basin Pipeline/MDU says it currently transports 90 million cubic feet per day, and this expansion will be another 30 million cfpd. I can't deal in large numbers but if I had $90 to spend and someone said they would give me another $30 that's a huge amount. And it appears that this increase capacity should be accomplished with relatively little effort. I would assume most of the environmental impact statements and rights-of-way will be easy to complete.