Bakken Midstream is looking into building the kinds of infrastructure that would be attractive to value-added natural gas industries, whether fertilizer, plastics, or something else. They have not yet announced what the projects might be, though they have said they think they will be able to announce them as early as late this year. The Williston Herald interviewed the company’s CEO Mike Hopkins about what the company is looking for, and why their effort will be different than previous attempts.
Q: What are some of the things these value-added industries will need in a location? Talk in terms of things like underground storage, and so on.
A: When you talk about the value-added industry itself, the ones who come because of the infrastructure, they are going to want water. They need transportation, railways, and they need a workforce.
You are correct about storage. There are different types of storage you can use. Some are better than others. There are all these choices to be made. We are looking at a variety of choices, but one way or another (any given project) will need storage.
They will also need proximity to the feedstock. Sometimes it’s natural gas just as natural gas, and sometimes it’s the liquids you can extract from the natural gas. The people who want to do value-added don’t want to do the work. They want it there, in proximity.
So I would say around the Bakken is the area of obvious interest to us, and to the kinds of companies that would want to do value-added.
It’s a complicated process that you go through, and that is what we are going through. We are very well into it. We balance all of these factors and proximity to markets that want the value-added products, so where does it make sense to have a cluster and have things distributed. You can come to Alberta to see how they did it.
Q: Why did Bakken Midstream pick North Dakota for this?
A: Steven Lebow is the chairman and founder of Bakken Midstream. He has invested and helped build some of the greatest companies around. Part of building a great company is building one that endures, and that is going to be around for decades, or generations. I think what he sees in North Dakota — and I think he was intrigued by friends and intrigued by the state —is principally this abundant growing natural gas resource that has not been effectively taken advantage of. He saw that as a combination of tremendous opportunity that is not a flip or a quick hit, but one with the right partners and the right capital that can be a business that goes on for generations. Steven is a person like myself, who looks to not only do well in business, but to do good. And this is a tremendous opportunity to do good.
Everything we’ve looked at, every single project that is under consideration, is going to be good for North Dakota.
Q: How many projects is Bakken Midstream looking at doing in the Bakken?
A: If we are breaking it down individually, there are at least 12. Obviously, we are not going to do all 12 at once, but we have looked at 12 different projects. Once we have individual priorities nailed down, then we will announce where and what.
We have looked at a number of things that are effective for when we talk about a whole new industry. It’s not just one project. Nothing we are doing is a one-off. Nothing is on its own. Everything we are looking at relates to everything else in an integrated industry.
Q: Are these projects speculative then?
A: Everything we are doing, we are working with the people who would utilize them. It’s important that we are building what people want, so no, we don’t want to do it on speculation. Every project we are working on, we are working intimately with the people who would use that service or that infrastructure. We will contract with the customers who need the infrastructure.
Q: Will there be other rounds of funding for the projects in addition to the first round of Series A?
A: The people the utilities are looking at large capital investments. (The series A) is the first round of corporate funding. There may be additional rounds of corporate funding.
We will certainly be raising significant funding for specific projects. There will be specific funding for specific projects.
One of the reasons we are excited about the investors in our company, those are the ones we will look to be working with when we get to very large capital meetings. As we get into project meetings, the capital costs will run into hundreds of millions and even into billions just in terms of what we are doing, let alone what they are doing. So, as we set up Bakken Midstream, we had to make sure we are setting it up in a way not just to access capital for our company, but to make sure we had the access to capital and the right relationships for the very significant capital required for the actual projects.”
Q: What makes this effort by Bakken Midstream different from previous efforts toward a petrochemical industry?
A: It’s not about coming in and doing a particular project. If you want to build a value-added industry, you have to look at the whole state. You have to look at all the resources, how they are utilized and how they can be utilized. Yes, at some point it comes down to one project at a time, but in the past they tried one thing, and that, the infrastructure wasn’t there and the other services. So we are looking at it from what infrastructure is needed to attract the companies that do value-added. I don’t think anyone has come in to do what we are doing.
Another thing is, we do have a roadmap. I came from Alberta, Canada. They set out to say we are going to change things. We need the infrastructure to utilize gas. They had extra flaring as you do. They were exporting a raw commodity as you do. They built out an infrastructure, and now they have a complete, value-added industry, and it really helps them. It protects them from the ups and downs of oil prices. A value-added industry is more steady. A lot of jobs are involved. It was a great addition to Alberta, making it not just a pure oil play.
Q: Is North Dakota offering what the petrochemical industry needs in the way of incentives, or do they need to offer other things as well? How has it been working with Gov. Doug Burgum and other state officials?
A: Anywhere that there is significant investment in petrochemicals, there is almost always if not always, significant government support to attract that kind of capital. That kind of capital is intending to come there to invest for years. Plants like this are billions of dollars.
One of the things that has impressed me about the state of North Dakota is that they want to innovate, not so much as legislate. Innovate is the right way to think about this.
My impression (of Burgum) is that he is the right kind of guy to help bring in industry. I have met him and other officials with the state, and I will tell you that working with different agencies of the state — and these are in the early days of our work — they were tremendously helpful in getting ourselves fully educated. We were able to learn everything we needed to learn about what makes North Dakota different, including disadvantages and advantages.