Bakken companies are building out natural gas infrastructure at a dizzying pace, trying to close a gap between excess production and limited takeaway capacity that threatens to further dampen prices and put an artificially low production ceiling on crude oil.
Among companies that have stepped up to the multi-billion plate with needed infrastructure are Hess, Crestwood Midstream, and ONEOK. Representatives of each talked about efforts their companies are making to expand natural gas takeaway and processing capacity during the annual Western Dakota Energy Conference which began Wednesday, Oct. 30.
“A tremendous amount of work is going on,” Pipeline Authority Justin Kringstad told the crowd, referring to the work the three companies outlined. “It’s head-spinning to think about all the work taking place currently and all the things planned for next year.”
Between 78 to 81 percent of the Bakken’s natural gas is being captured, according to Kringstad’s most recent graphics. Of gas being flared, 5 percent is from stranded production, not attached to any infrastructure.
That leaves 14 to 17 percent of production that has sold gas at some point, which means it is connected to infrastructure, but is nonetheless being flared.
“That infrastructure is bottlenecked,” Brent Lohnes with Hess Corporation explained. “So that is where our problem and our opportunity lies, to get on top of the gas capture challenge.”
Hess corporation, Lohnes said, has a long history in the Bakken, and is presently its No. 2 producer.
“We have six rigs running right now, and they will produce about 165 new wells into our portfolio,” he said. “We have 1,500 actively producing today. And we have about a 15-year inventory of wells yet to be drilled. That translates to about 3,000 more wells just in our portfolio in the state.”
This opportunity is also a challenge though, because it will come with increasing ratios of gas to oil. Hess has already committed about $3 billion toward providing natural gas takeaway and processing across its holdings, as well as leaving some room for third-party operators.
Their effort began with expansion of the Tioga gas plant to 250 million cubic feet per day and a joint venture with Targa Resources for a 100 million cubic feet per day plant.
The Tioga plant includes 60,000 barrels per day of fractionation capacity, half of which is transported by pipeline and half of which is trucked out.
The Tioga plant will be expanded again to 400 million cubic feet per day, likely in 2021. That won’t include more fractionation, however. That market is already saturated, Lohnes said.
Diaco Aviki, with Crestwood Midstream, has built infrastructure on Fort Berthold, a hot spot for constrained production.
Rather than build just one big facility, the company started with a smaller facility, which they could finish more quickly — in just seven months. Then they went to work on a second, larger plant that could handle 120 million cubic feet per day. The company has invested $668 million so far and climbing.
They are among companies awaiting more takeaway for y-grade NGLs, however, which they will get once ONEOK Midstream has completed its Elk Creek Pipeline.
That important piece of the gas capture puzzle will carry up to 240 million barrels per day of y-grade NGLS out of the Bakken.
ONEOK already has about 1 billion cubic feet per day of natural gas processing capacity for the Williston Basin. By 2021, it plans to have 1.6 billion cubic feet per day in processing capacity.
Among their many projects are two large processing plants in the Keene area, Demicks 1 and 2, both of which can take up to 200 million cubic feet per day, and a 200 million cubic feet per day expansion of Bear Creek in Dunn County. The Demicks Lake plants were part of an overall $2.3 billion capital plan the company announced last year.