North Dakota’s pipeline capacity for crude oil is becoming constrained, despite the recent construction of the Dakota Access pipeline in 2017, which added takeaway capacity of up to 570,000 barrels of oil per day.

Now a new partnership proposes to add another large transmission line that can carry Bakken crude to a market hub in Cushing, Oklahoma. From there, it could access Gulf Coast markets.

Phillips 66 and Bridger Pipeline are proposing a 24-inch line capable of moving up to 350,000 barrels of oil per day from the Rocky Mountain region, which includes the Bakken. The project would cost $1.6 billion. Its capacity could be expanded further, if future shipping contracts warrant it.

Bridger is the sister company to Belle Fourche, which is responsible for one of North Dakota’s largest water body spills to date. It is also the company responsible for a 2015 spill near Glendive, Montana that threatened that community’s water supplies. The company was fined $1 million by the Montana DEQ for that spill.

The 50-50 joint venture between Phillips 66 and Bridger has been underpinned by long-term volume commitments, a press release from Phillips 66 says. A supplemental binding season will be offered at a later date, to allow more shippers to sign on.

“The Liberty Pipeline presents us with a great opportunity to serve producers in the growing Bakken and Rockies production areas,” said Greg Garland, chairman and CEO of Phillips 66. “The pipeline adds to our integrated infrastructure network that serves the key shale oil producing regions with connectivity to major Gulf Coast market centers. Our pipeline network has strategic alignment with our Central Corridor and Gulf Coast refineries, further enhancing value across our assets.”

Bridger Pipeline’s CEO Hank True said the pipelines will help the Rockies and the Bakken continue to grow its production.

North Dakota is producing close to $1.4 million barrels of oil per day, presently. Charts prepared by North Dakota Pipeline Authority Justin Kringstad show pipeline capacity of about 1.750 million barrels per day with both existing and announced capacity.

That meets production in the state’s low case scenario, but is still well below capacity in the higher case scenario that state officials consider more likely.

The Bridger-Phillips 66 line might carry about 200,000 barrels per day of Bakken crude, Kringstad told the Bismarck Tribune in a report earlier this week. That would bring takeaway capacity closer to the higher scenario’s production output — at least on paper. West coast crude would still get railed out, however, as no pipelines traverse that direction due to the terrain.

“The Liberty Pipeline is an important undertaking on the part of our company to ensure that oil from Wyoming, the Rockies and the Bakken can get to markets in the U.S. and around the world,” True said. “Our commitment to the Liberty Pipeline will give producers confidence to grow oil production in these important regions.”

Phillips 66 will lead the project’s construction and will operate the pipeline.

A Bridger Pipeline official told the Bismarck Tribune the likely route would be across the southwest corner of the state, but an application hasn’t been filed with the North Dakota Public Service Commission. That agency will require a permit for the final route.

However, Rich Johnson, a spokesperson for Phillips 66, said the pipeline will not travel through North Dakota. Companies could construct a line from North Dakota to the Liberty Line, Johnson said, and suggested the Bridger official might have been talking about such a project.

“The Liberty pipeline starts in Guernsey and then heads southeast to Cushing,” he said. “We are following existing corridor to Cushing.”

Phillips 66 wants to complete the line by the first quarter of 2021, pending regulatory approval. The company has another joint venture with Plains Pipeline that will build takeaway capacity from Cushing to Texas, to relieve constraints there.

“I think this will be viewed positively by the producers in the area,” Johnson said. “It’s another means of getting products to other markets.”

The project would be the largest crude oil pipeline completed since the construction of the Dakota Access pipeline, which attracted protesters from around the world in 2016 and 17.

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