Another Revenue Stream for Mineral Rights Owners

Back on September 28, 2011, I posted a story about a new liquid natural gas pipeline stretching between Tioga and Sherwood, North Dakota. At that time, my emphasis was on the need for additional housing for workers needed for all these projects in the Bakken. I wasn't even thinking about an additional revenue stream for mineral rights owners because I was not aware how "valuable" liquid natural gas was compared to dry natural gas.

Coincidentally, we now have a much better explanation of what this pipeline is all about.

RBN Energy has posted this story for Friday, April 27, 2012.

First, the key point from my September posting:

77-mile natural gas pipeline to be buried between Tioga and the Alliance mainline at Sherwood, North Dakota, on the Canadian border. Aux Sable Liquids Products has a natural gas liquids processing plant in the Sherwood area.

Now, from the RBN Energy article:

But there is another way of getting NGLs out of the Bakken.  It is an alternative with significant advantages, but does not seem to get the airplay of some of the other projects.  And that’s because it doesn’t fit neatly into one of the traditional hydrocarbons asset buckets.  It is not an NGL pipeline, but it moves 80,000 barrels of NGLs each day.  It takes wet gas with only superficial processing, but processing is an integral part of the integrated system.   It has one operational lateral already moving product out of Mountrail and Ward Counties, and has another lateral going into the Tioga plant next year.  Of course, this is the Alliance Pipeline - Aux Sable system.

In June 2011, Alliance Pipeline announced plans to build an 80 mile lateral pipeline and associated facilities connecting Hess’s Tioga, ND gas processing facility to the Alliance Pipeline near Sherwood, ND.  The line will have a capacity of 106 mcf/d and is expected to be in service by July 2013.

Dry natural gas: < $2.00/MMbtu.
Liquid natural gas: >$13/MMbtu.
I do not even recall this in the monthly Director's Cut.