ONEOK Bringing Additional Natural Gas Processing Capacity On Line For North Dakota -- November 16, 2019

From Geoff Simon on Friday, November 15, 2019:

By January 2020, ONEOK Corporation will have constructed enough natural gas processing capacity that it will be able to handle nearly half of North Dakota's total production. January 2020? That's two months from now.

Natural gas processing plants in North Dakota are tracked here.

The state topped 3 billion cubic of natural gas production per day in August, but ONEOK will soon have the capacity to process 1.4 BCF per day.

Dick Vande Bossche, VP for Commercial Gas Supply with ONEOK Rockies Midstream, told members of the legislature's interim Energy Development and Transmission Committee this week that the company brought in service in October its Demicks Lake I plant in McKenzie County. The plant has the capacity to process 200 million cubic feet of gas per day.

Vande Bossche said ONEOK is also on schedule to bring Demicks Lake II, a second plant capable of processing 200 MMcf/d, in service sometime in January 2020.

A third plant - Bear Creek II with 200 MMcf/d capacity - is under construction in Dunn County and will be in service the first quarter of 2021.

And Vande Bossche also told legislators that ONEOK has plans for yet another 200 MMcf/d capacity on the drawing board.

"We filed certification with the PSC for another 200 million per day processing plant in McKenzie County, so that's working its way through the approval processes," Vande Bossche said. "We have interim funding to do some long lead item purchases as it relates to that 200 million a day processing facility."

He said final execution of plans for the additional gas processing plant are contingent on board approval of the project. ONEOK is also nearing completion of its Elk Creek Pipeline that will move up to 240,000 barrels per day of natural gas liquids to processing facilities in Kansas and points south. It's expected to be fully operational by the end of 2019.

Worth Re-Posting -- February 13, 2018 -- North Dakota Natural Gas Production Setting Records

Rigzone, Eni, and others are making a big deal about the big natural gas field found off-shore near Cyprus (Mediterranean Sea), where Eni says it will produce 2.9 Bcf of natural gas by the end of the year (2018). Don't get too excited: the Bakken, an oily play -- not a natural gas play -- already produces more natural gas than Eni does from the Zohr field. From an earlier post:

February 12, 2018: Turkish warships are impeding a rig from reaching a location of Cyprus where Italian energy company Eni is scheduled to drill for gas. -- from Twitter. Update from Reuters. Turkey is wearing out its "welcome" in the EU. Eni says it will produce 2.9 Bcf per day from Zohr field by second half of 2019. Compare that "2.9 Bcf" to the Bakken: from the last Director's Cut,

What was North Dakota's natural gas production in the most recent month, November, 2017? Yup, another all-time high: 2.1 billion cubic feet / day.

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Asian Demand For Natural Gas Surging

From Bloomberg:

Asia’s rapacious thirst for liquefied natural gas is sucking supplies from surprising places.

China to Japan and South Korea are paying top dollar for the super-chilled fuel. The pull is so strong that Norway’s Statoil ASA, which usually exports most of its LNG to Europe, is shipping a rare cargo east. It plans to send more.

Asia gets most of its LNG from Australia, including from the giant Gorgon project on the country’s northwest coast. Malaysia, Papua New Guinea and Indonesia are also big suppliers.

Statoil’s tanker, the Arctic Aurora, due in South Korea this week shows how the LNG market is becoming global, with more cargoes traveling long distances from the Atlantic to the Pacific region as China leads a landmark shift to burning gas instead of coal. For Statoil, it’s a chance to squeeze a little more profit from its overall gas production that’s already near full capacity.

“What we’ve seen in Asia is strong prices,” said Peder Bjorland, Statoil’s head of natural gas. But “it doesn’t help to have strong prices if you don’t have the shipping capacity. It’s been difficult to get hold of spot vessels.”

The producer has in the past sent cargoes to Malaysia, China, India and Japan, but it mainly serves the markets in Europe and the Americas.

Director's Cut Has Been Posted; North Dakota Crude Oil Production Data For November, 2017, Has Been Released; Crude Oil Production Increased Month-Over-Month; Producing Wells At An All-Time High; Natural Gas Production Hits Another All-Time High

Director's Cut for November, 2017, data, pending. The Director's Cut should be released today at 11:00 a.m. CT.

Link here. NDIC site for calendar and links for past and current Director Cuts here.

The usual disclaimer applies. I do "this" quickly and there will be typographical and factual errors. If this is important to you, go to the source.

Pricing, most current data I can find, January 12, 2018:

A reader told me that the NDIC uses the pricing at Flint Hills Resources for the oil prices reported at the monthly Director's Cut. At the link, one has a choice of clicking on "EDQ" or "Bulletins." Click on "Bulletins" and then click on "Download." The result should show up as a PDF on your desktop.

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The Data

Natural gas production: in April, 2017, it was reported that North Dakota produced a record amount of natural gas: in that month, natural gas production jumped 6% more than 1.8 billion cubic feet / day. What was North Dakota's natural gas production in the most recent month, November, 2017? Yup, another all-time high: 2.1 billion cubic feet / day.

Oil production

• November, 2017: 1,194,920 bopd
• October, 2017: 1,183,810 bopd
• Delta:  an increase of 11,110 bbls
• Delta: an increase of just under 1%

Producing wells:

• November, 2017: 14,324 (an all-time high)
• October, 2017: 14,253
• Delta: an increase of 71 wells;

Permitting

• December, 2017: 147
• November, 2017: 119
• October, 2017: 147 
• September, 2017: 104
• August, 2017: 101
• July, 2017: 146 (huge jump)

Oil price (WTI), breakeven price statewide = $21

• today: $54.75
• December, 2017: $49.56
• November: $49.75
• October: $43.56
• September: $39.56
• August: $37.93
• July: $35.83
• June: $34.72

Rig count:

• today: 56
• December: 52
• November: 54
• October: 56
• September: 56
• August: 56
• July: 58
• June: 55

Wells not producing, total: about 2,375 not producing; that exceeds the number of wells completed in any year during the boom

• waiting on completion: 883, down from 6 the end of October to the end of November
• estimated inactive well count: 1,492, up 21 from the end of October to the end of December

Takeaway capacity:

• November: takeaway capacity including CBR to coastal refineries is more than adequate
• October data: including CBR to coastal refineries is more than adequate
• September data: including CBR to coastal refineries is more than adequate
• August data: including CBR to coastal refineries is more than adequate
• July data: including CBR to coastal refineries is more than adequate
• June data: including CBR to coastal refineries is more than adequate
• May data: including CBR to coastal refineries is more than adequate (major change in verbiage)

Natural gas capture, has been getting "worse" and FBIR was a major issue; the trend has improved; it looks like ND has "turned the corner" on this issue

• statewide: 86% (previous -- 84% [trend has improved)
• FBIR: 75% (previous -- 74%)
• goal: 88% through October 31, 2020; then 91%
• comment: October, 2017, was terrible; it's getting better on FBIR

That Fertilizer Plant Talked About Earlier? Jamestown, North Dakota

A big "thank you" to a reader or readers for sending me several links regarding this story.

I posted this back in early July:

New billion-dollar fertilizer plant being proposed, from the Grand Forks Herald: 

The North Dakota Corn Growers Association announced Monday that a feasibility study has been completed for the plant, with the steering committee of corn growers and fertilizer industry consultants looking at building the facility in North Dakota, South Dakota or Minnesota. 

The North Dakota Corn Growers Association announced Monday that a feasibility study has been completed for the plant, with the steering committee of corn growers and fertilizer industry consultants looking at building the facility in North Dakota, South Dakota or Minnesota.

Plans are moving along for a $1 billion nitrogen fertilizer plant that could make use of the natural gas now being flared off in western North Dakota’s Oil Patch.

It looks like they might have chosen a site, data points:

• Jamestown, North Dakota; $1.3 billion fertilizer plant; using natural gas from the Bakken
• a capacity of 750,000 tons of anhydrous ammonia/year
• North Dakota Corn Growers Association spearheading the effort
• need to raise $300 million in equity from the farmers; minimum investment: $35 - $50,000/individual
• construction could begin in April, 2015; production a year later
• plant could be paid off in five years

For another interesting story about this site, read the comments below, and go to this link:

http://www.greatriverenergy.com/makingelectricity/newprojects/spiritwoodstation.html

Some Random Statistics From The Williston Basin, August, 2012; Natural Gas Infrastructure Estimate at $8 Billion

There are over 7,300 active wells in North Dakota. As of June, 2012, the state was producing about 660,000 bopd.

There are 190 active rigs in North Dakota (down from a record of 218; up from recent low of 189)

The state has issued 1,464 oil, gas, and salt water disposal permits so far this year. That puts "us" on track for 2,236 new permits for calendar year 2012, a record for the current Bakken boom.

There are 1,872 wells on the confidential list today; that does not include those which came off the list today. The list includes about 35 salt water disposal wells.

In 2011, the natural gas infrastructure necessary to support the Bakken was estimated to be about $4 billion (10 natural gas processing plants, infrastructure to support those plants); in 2012, the estimate had risen to $8 billion (about 20 natural gas processing plants); the Bakken is an oil field, not a natural gas field.

On the confidential list, by selected operator:

• BEXP: 158
• Burlington Resources: 82
• CLR: 243
• Denbury: 45
• Enerplus: 72
• EOG: 35
• Fidelity: 16
• G3: 20
• Helis: 12
• Hess: 186
• Hunt Oil: 23
• KOG: 77
• Marathon: 75
• Newfield: 32
• Oasis: 38
• OXY: 34
• Petro--Hunt, LLC: 126
• QEP: 32
• Samson Resources: 53
• Slawson: 50
• SM Energy: 30
• Triangle: 15
• Whiting: 79
• WPX: 71
• XTO: 56
• Zavanna: 20
• Zenergy: 33

Looking at the list may provide some clue why KOG seems to command a better share price than Oasis.

With 243/1,872, CLR has about 13% of the wells on the confidential list.

Petro-Hunt, LLC, is very, very active.

EOG has certainly dropped down the list in terms of active program in the Williston Basin.

Natural Gas Primer -- RBN Energy -- A Must Read For Newbies

There is so much thrown at you and me on a daily basis regarding the Bakken, oil and gas, etc., that it is hard to sort out what it worthwhile to read.

If you are a newbie to the oil and gas industry in the Bakken, a couple of quick points. The Bakken is considered an oil field. The natural gas has been considered a by-product. Others may have been interested in this by-product but the company that stands out in my mind with regard to natural gas in the Bakken is ONEOK. Search the site for ONEOK, if interested.

There is the dry natural gas everyone talks about, the natural gas that is selling for $2 to $3 right now due to a huge nationwide glut. Oil and gas companies are switching emphasis from natural gas to oil due to the glut.

However, only recently are "we" learning that the Bakken has a high percentage of wet natural gas (natural gas liquids). A Bentek Energy study commissioned by the NDIC and released earlier this week suggests an impending (wet) natural gas boom in the Bakken. This was a huge story.

I get a lot of questions regarding wet natural gas. RBN Energy provided an outstanding wet natural gas primer today.

In addition to explaining natural gas terminology, RBN Energy also explains pricing of wet natural gas, a question that came up recently at this site:

There’s one more aspect of NGL markets that must have been designed to confuse outsiders, because it certainly does.  NGL quantities are quoted in barrels.  NGL prices are quoted in gallons.  Really.  So I’ll sell you 10,000 barrels of non-TET normal butane for $1.36 per gallon.  It never occurs to NGL people to convert either the quantity to gallons or the price to a per barrel number.  They think of everything multiplied by or divided by 42.  Go figure.  And BTW, propane retail people do think in gallons - but that’s another story.

You can't find any language more clear. That's how every RBN Energy essay is written: very, very easy to understand. 

See also my FAQ page, and specifically questions 57 and 58.

Wow -- ONEOK To Increase Investments in the Bakken

Updates

May 22, 2017: announces completion of new Bakken offices in Sidney, MT.
 
March 1, 2017: very upbeat 4Q16 and full year report.

December 2, 2016: one year ago,  shares trading at $20; today, shares trading at $55.

January 15, 2015: corporate presentation, January 8, 2015.

January 14, 2015: ONEOK increases dividend. 

December 15, 2014: ONEOK to add de-ethanizers at their two NG plants west of Williston, Stateline I and Stateline II.

July 30, 2013: update on projects in the Bakken for 2Q13.

January 17, 2013: ONEOK announces it will build a fifth natural gas gathering and procession plant in North Dakota, to be named Garden Creek III. 

December 10, 2012: public hearing on Garden Creek II, to be co-located with Garden Creek 1, ten miles northeast of Watford City; 100 million cubic feet/day of natural gas; 

November 27, 2012: ONEOK will not go forward with Bakken Crude Express Pipeline.

October 22, 2012:  Link to Oil & Gas Journal here, re: ONEOK, update:

Data points:

• ONEOK announces "open season" for previously announced Bakken Crude Express Pipeline
• 1,300 mile crud oil pipeline
• from Williston Basin to Cushing hub
• 200,000 bopd
• construction to begin in early 2014; completion by mid-2015

September 24, 2012: Earnings forecast; dividend increase; outstanding report; 

September 7, 2012: ONEOK's presentation at Barclays. SeekingAlpha.com transcript here.

September 5, 2012: ONEOK presents at Barclays; transcript.

September 2, 2012:  Update on the ONEOK Bakken NGL Pipeline; problems in Crook County, Wyoming

Original Post

A huge "thank you" to a reader for sending me this note; I would have missed it.

The other day, in a series of comments regarding natural gas and ONEOK, I came very, very close to suggesting it was just a matter of time before ONEOK would announce another natural gas gathering and processing plant. Wow, I wish I had posted that, but I have become so well-known for my bias regarding the Bakken, I have backed off adding comments about what I think we might see in the Bakken.

Here's that story from Yahoo!Finance:

ONEOK Partners, L.P. today announced plans to invest approximately $980 million to $1.1 billion between now and 2014 to:

• Build a new 75,000 barrel-per-day (bpd) natural gas liquids (NGL) fractionator, MB-3, at Mont Belvieu, Texas, and related infrastructure;
• Build a new 100 million cubic feet per day (MMcf/d) natural gas processing facility – the Garden Creek II plant – in eastern McKenzie County, N.D., in the Bakken Shale in the Williston Basin, and related infrastructure;
• Increase capacity on the Bakken NGL Pipeline to 135,000 bpd from 60,000 bpd; and
• Build a new 40,000 bpd Ethane/Propane (E/P) splitter at Mont Belvieu, Texas.

This is an incredible announcement coming when it does -- regular readers have been treated to a series from articles from RBN Energy, ISA, and from readers talking about the coming natural gas boom in North Dakota.

And don't forget this Forbes article that Don sent me some time ago and I linked: natural gas is headed to $8.00.

First The Saudis, Now Russia: The Bakken Changes Things

I love it.

First it was the Saudis who admitted the Bakken changed things.

Now, it's the Russians. This is really quite incredible. Talk about tectonic shifts.

The U.S. shale gas boom has not only virtually eliminated the need for U.S. liquefied natural gas (LNG) imports for at least two decades, but significantly reduced Russia’s influence over the European natural gas market and "diminished the petro-power" of major gas producers in the Middle East and Venezuela.

According to a study by Rice University’s Baker Institute, "Shale Gas and U.S. National Security", U.S. shale gas has substantially reduced Russia’s market share in Europe from 27 percent in 2009 to 13 percent by 2040, reducing the chances that Moscow can use energy as a tool for political gain.

European customers now have an alternative supply to Russian gas in the form of LNG displaced from the U.S. market. The shale boom also has exerted pressure on the status quo by indexing gas sales to a premium marker determined by the price of petroleum products.

Russia already has had to accept lower prices for its gas and is now allowing a portion of its sales in Europe to be indexed to spot gas markets, or regional market hubs, rather than oil prices.

Re-read that; think about all that is packed into those few paragraphs.

Just that first line: "The US shale gas boom has not only virtually eliminated the need for US liquified natural gas imports for at least two decades, but ...." Two decades. And that's with current technology. At current prices.

Of course, the article is about natural gas, and the Bakken is about oil, but, as far as I'm concerned, my myth is that it was the Bakken that provided the laboratory to make all the rest possible.

Be sure to go to the link: the writer does not refer to it as a tectonic shift, rather a "paradigm shift."

You don't need a weatherman to know which way the wind blows.

Subterranean Homesick Blues, Bob Dylan