Sunday, October 30, 2011

Expansion of the Hess Tioga Plant; Compare to the New ONEOK Plants -- The Bakken, North Dakota, USA


Because the Bakken is considered an oil field and not a gas field, I concentrated on the oil aspect of the Bakken when I began this web-log. In addition, I was more comfortable with oil, and had a more difficult time understanding natural gas and the other by-products of oil production in the Bakken. Because of that blind spot, I failed to pay much attention to the natural gas projects -- gathering and processing facilities, and pipelines -- that were generating a lot of jobs, and pouring a lot of cash into the economy.

The link below to an article in PennEnergy is a good example. I do not recall if I saw it when it was first published in September, 2010, but even if I had, I may not have paid any attention to it. Now I understand why a reader wondered if the new ONEOK processing plants were half the size of the Tioga plant. The Hess expansion project at Tioga is huge; some datapoints:
  • a $500 million expansion project; I believe the three new ONEOK projects total about $500 altogether (I vaguely remember posting that; I'm sure I could be mistaken)
  • the project will employ 300 to 500 personnel, and that fits with the large number of workers I saw at the ONEOK plant west of Williston
A reader provided a lot more background to this project; see "original post" below.

Original Post

This all started with my original post on the new ONEOK natural gas gathering and processing plants west of Williston. If this is new to you, you may want to return to one of the earlier posts. These related posts are now tagged/labeled with CRYO, ONEOK, or Pipeline; tags/labels are found at the very bottom of the blog.

Again, more information regarding the natural gas picture in the Bakken. This comes to me in the way of a comment.

Knowing that some folks won't see the comments, the information is printed here as a stand-alone post.
The Hess Tioga plant expansion will include the ability to fractionate (separate) ethane from the methane and from the natural gas liquids (NGL). That plant had previously had left the ethane with the methane - leaving both as a gas. The removal of ethane is much more difficult technically and requires much higher capital than removal of propane/butane/nat gas. An ethane pipeline into Canada is also being constructed. In Alberta, the chemical industry there has the capability to convert ethane.

So in effect the Hess Tioga plant is not only expanding, but moving from two products (a methane/ethane gas mixture plus a NGL mixture without ethane) to three products: methane gas, ethane liquid, and a NGL mixture without ethane. By contrast, the ONEOK plants will have two product streams (methane and NGL with ethane).

"The expansion will be located about a mile from the current Tioga plant in Williams County. For an investment of $500 million, the expansion will allow the plant to process ethane from natural gas, which is used as a refrigerant and in chemical manufacturing."

Nat gas and oil pipelines in ND:

ND nat gas plant infrastructure:
All of these projects require a lot of new workers, and helps explain the huge man-camps in the Tioga area.

Statoil Comin' to the Bakken -- The Bakken, North Dakota, USA

If you thought the Bakken has been exciting so far, wait until the Norwegians get here.

Statoil Reklame (advertisement)

Statoil buys into the Bakken.

Carpe Diem Never Fails to Surprise, Impress -- Now, It's "In 'N Out Burger -- Absolutely Nothing To Do With The Bakken

My favorite hamburger restaurant in southern California is "In 'N Out."

So, this link is incredible. Of all the things that might get posted today, what a surprise to see this one.

In Texas, my favorite hamburger restaurant is Whataburger.

And in the Bakken, the best burgers are at the Economart.

Update on Slawson's Armada Well -- Just One Year Old -- The Bakken, North Dakota, USA

Tested one year ago but data below is just through August; not on a pump as of August, 2011. 

NDIC File No: 19010     API No: 33-061-01359-00-00     CTB No: 119010
Well Type: OG     Well Status: A     Status Date: 10/13/2010     Wellbore type: Horizontal
Location: SWSW 14-151-92     
Current Well Name: ARMADA FEDERAL 1-14-13H
Total Depth: 19890     Field: VAN HOOK
Spud Date(s):  6/29/2010
Completion Data
   Pool: BAKKEN     Comp: 10/13/2010     Status: F     Date: 10/14/2010     Spacing: 2SEC
Cumulative Production Data
   Pool: BAKKEN     Cum Oil: 116,898     Cum MCF Gas: 33805     Cum Water: 58998
Production Test Data
   IP Test Date: 10/14/2010     Pool: BAKKEN     IP Oil: 847     IP MCF: 600     IP Water: 2640

Sanish Field Oil Production Decline -- The Bakken, North Dakota, USA

Elsewhere (all Teegue links are broken; couldn't take the heat) they're talking about the decline in production rate in Whiting's huge field, the Sanish.

My hunch is that down the road, these wells will be re-fracked.

But for the moment, the writer may be on to something. Some of the most prolific fields have been in Mountrail County. Here are the production totals by month for Mountrail County for selected months:
  • August, 2008: 1,586,456
  • August, 2009: 2,934,463
  • August, 2010: 4,194, 633
  • August, 2011: 4,495,934
  • August, 2012: 6,043,517
  • August, 2013: 6,837,328
  • August, 2014: 7,831,948
 [Update: December 1, 2014 -- another example, I guess, for some of the crazy analyses over at that discussion board.]

A couple of things: the "business of the business" is more important than the business activity itself. In this case, the monthly production is simply one data point. Other data points that would be helpful would be the current takeaway capacity across the Bakken (probably not a factor, in this case, but we don't know), and the producers' ability to adjust production based on price of oil. The price of oil dropped this past summer. [See date of original post.]

Here are the NDIC figures for the past year or so for the Sanish-Bakken (pay attention to the second column [total monthly production] and the fifth column [number of producing wells]:

Date BBLS Oil BBLS Water MCF Gas Wells Producing BBLS Injected MCF Injected Wells Injecting

Pipeline Issues in the Bakken -- North Dakota, USA

It's incredible how much great information is sent to me. I really appreciate it. Often I post the information as soon as I get it without reading it first to get it out to readers as quickly as possible. Then I go back and read it myself.

An excellent example is the natural gas gathering and processing story that was sent to me overnight. The commentary was excellent, and the supporting documentation/links were outstanding. I post a lot every day and for newbies, it's important to scroll down to see the several articles that have been posted (of course, I also update links to previously posted items, the more important ones linked on the sidebar at the right).

One of the links in that post include one from "My West Texas." Two things jump out.
  • I am a big fan of pipeline companies and this article validated my hunch that pipelines will be one of the big winners in the Bakken going forward; and, 
  • all the references to natural gas liquids and crude-by-rail oil loading facilities.
At the link:
Producers can no longer, as Lippe said, simply punch holes in the ground and assume product will get to market. Strictures in transportation and processing may even affect drilling projects at some point if capacity cannot grow fast enough.
I thought the takeaway issue had been resolved in the Bakken based on corporate presentations. There may be more going on at all the CBR facilities being built in western North Dakota than just oil. Every time I think the Bakken has no more surprises, something new pops up.

If you are interested in Bakken natural gas and/or pipelines, you need to check out the links above.

Crosby, North Dakota, Hospital: $7.5 Million Renovation -- The Bakken, North Dakota, USA

Link here.
St. Luke’s Hospital in Crosby is undergoing $7.5 million in renovation and new construction from grants and donations.

A celebratory luncheon was held Thursday, followed with a tour of the new parts of the hospital by St. Luke’s CEO Keith Baker.

Continental Resources donated $100,000, and the emergency room is now named the Continental Resources Emergency Center. Harold Hamm, founder of Continental Resources was present.
According to the article, Harold Hamm is part of a philanthropy group made of up 69 folks who have pledged to give half of their wealth away during their lifetimes.

Crosby is about 80 miles north of Williston, near the Ambrose / West Ambrose fields.

Update on LNG Acivity in Western North Dakota -- The Bakken, North Dakota, USA


May 8, 2012: There are three huge stories coming out of the unconventional oil/shale/fracking story: a) oil; b) natural gas; and, c) ethylene.

Two of the three stories are well known:
  • The Bakken is an oil field, and this blog is mostly about oil, the first story.
  • The second story is how the massive amount of natural gas in North America will have a disruptive effect on the US energy policy going forward. Essentially, it's this: natural gas will pretty much eliminate alternate non-transportation energy sources (nuclear, coal, wind, solar). 
The third story is not as well known: ethylene. I don't think much about that story. It takes a lot of articles to remind me how big a story this really is. Read the original post for background regarding the ethylene story.

Over at Carpe Diem, there is another reminder regarding ethylene:
"The [shale] discoveries have prompted several firms — including Dow Chemical Co. and Shell Oil — to announce plans to build new North American ethylene crackers, with Shell making the almost-unheard-of decision to place its new cracker in western Pennsylvania, near the gas-rich Marcellus Shale. Other companies, including Chevron Phillips Chemical and Formosa Plastics, have announced plans to increase their North American polyethylene output as a result of the shale gas wave.
These three stories are huge.  I have to keep posting these stories to remind me how big these stories are, particularly the ethane/ethylene story.

Original Post

For folks who are new to the site or who have not read the earlier posts on the ONEOK cryo natural gas processing plants going up west of Williston, you should read an earlier post first, which will also link you to the post that started this discussion.

This post will also answer the question that is frequently asked, what does "O," "G," and "P,' or "PPROD," stand for on your royalty statement.

The individual who has really helped me understand what these plants are all about has provided a wonderful overview; it was posted as a comment but is reprinted here for those who may not read comments:

What should be noted is the natural gas liquids (NGL) that are a high fraction of the raw natural gas stream are higher value than the natural gas itself - about twice the value of methane for the Bakken.

ONEOK estimated the NGLs to be 6% of Bakken value, with 3% as NG. Untreated NG consists of methane, natural gas liquids (ethane, propane, butane, and nat gasoline), carbon dioxide, H2S, SO2, some nitrogen, and water vapor. The nat gas plants in ND separate out the CO2 and water, remove the sulfur, and separate the NGLs from the methane, and then liquefying the NGLs.

Almost as important as the four plants ONEOK that will operate is the $500 million NGL pipeline that ONEOK is constructing from near the MT/ND line to the Overland NGL pipeline in Colorado, which in turn feeds into Bushton, Kansas. At Bushton, ONEOK owns a fractionator complex that separates the NGLs into their own components. Each of these components have their own markets, which in most cases are compared to WTI prices.

See pp 71-90 on presentation

Ethane is the key building block for the plastics industry - but first the ethane must be processed through a cracker that produces ethlyene. Much of the cracker capacity in North America had been shut down when NG and NGL prices were high, as foreign ethane had to be imported to stay operating (Dow Chemical, Ethyl and others nearly gave up on North America, leaving the chemical and plastic industry to Europe and the Middle East just three years ago). Now, older ethylene plants have been restarted in Texas and there is talk of building new NGL to plastic plants in the Utica/Marcellus region - which would take billions in capital.

Because of the NGL pipeline that ONEOK is building, the NGL side of the Bakken should be much more profitable. Most of the regional companies will contract with ONEOK, as the capital demands to reproduce what ONEOK is doing is huge ($1.7 billion or more) although larger companies (obviously Hess) as well as EOG, XTO, and others, may build additional plants / capacity, but choose to tie into ONEOK's pipeline.

An article on the massive changes ongoing in the NGL business:

A huge "thank you" for this information. Maybe the local newspapers will pick up this story and do a feature article on it. The Williston Herald has become too small a newspaper for some reason to carry this story, but this would be a great story for a paper like the Bismarck Tribune.