Alberta, Canada was once like the Bakken, flaring an abundant supply of natural gas — and future wealth — to the blue sky. The province was able to change that by investing in the right infrastructure, helping it to eventually produce and export value-added natural gas products.
Bakken Midstream wants to help write a similar success story in North Dakota, where the state is flaring 20 percent or 555 million cubic feet per day of natural gas, according to the most recent statistics. The company has just announced the closing of a Series A funding round, to begin the process of doing just that.
Series A is the term investors use to refer to a company’s first significant round of venture capital. It’s typically issued as some type of preferred stock.
A news release characterized the round as “over-subscribed,” but did not say how much money was raised.
Mike Hopkins, CEO for Bakken Midstream, indicated the round is just the first of more to come as the company looks at building the right infrastructure to bring value-added natural gas companies to the Bakken.
Several big names were dropped in the release as investors in the Series A funding round. These include:
• Richard A. Galanti, longtime CFO of Costco Wholesale
• Charles J. Philippin, formerly longtime chairman of Ulta Beauty
• George P. Orban, co-founder and lead director of Ross Stores
• Herald L. Ritch, founder of DC Advisory
The round was led by the Family Office of Bakken Midstream founder and chairman Steven E. Lebow, who is described on the company’s website as a financier for the early stages of several world-class companies, including Costco, Starbucks, PetSmart and Ulta Beauty.
Lebow has been studying the natural gas situation in North Dakota for the past five years, according to the company’s website.
“The natural gas resources of North Dakota are certainly a big opportunity,” Lebow said in the company’s press release. “We’ve assembled a world class leadership team, including our CEO Mike Hopkins who helped develop over $12 billion of natural gas-based infrastructure before building his prior company, Ice Energy, into the leading distributed thermal energy storage company. The projects being undertaken by Bakken Midstream are very capital intensive and highly attractive to infrastructure and private equity funds and other institutional investors we know well.”
Hopkins said Lebow was introduced to North Dakota by friends, and intrigued by the abundant — and growing — natural gas resource that is presently being lost to the air.
“He saw it as a combination of a tremendous opportunity that is not a flip or a quick hit, but one that, with the right partners and the right capital, can be a business that goes on for generations,” Hopkins said. “And he is a person, like myself, who looks to not only do well in business, but to do good. This is a tremendous opportunity to do good.”
The state legislature recently approved tax incentives intended to attract a plastics plant. Bakken Midstream was among those testifying in favor of that. However, the company isn’t looking at building a plastics plant or an ethane cracker. They are looking at building the infrastructure for value-added natural gas industries willing to locate in the state and put the state’s flared gas to work.
In all, Hopkins said Bakken Midstream has 12 different projects under consideration. These would all be contracted projects, for companies that want to utilize the infrastructure that is being built.
“Everything we looked at, every single project that is under consideration, is going to be good for North Dakota,” Hopkins said. “Once we have individual priorities nailed down, we will announce where and what.”
Hopkins is described on the company’s website as an entrepreneur from Alberta, who has participated in the development of more than $12 billion in natural gas-based infrastructure there.
Alberta, Hopkins said, provides a roadmap of how and what could happen in North Dakota. Canada now flares just 3 percent of its natural gas, according to the company’s website, and has invested in projects exceeding $224 billion, of which a petrochemical industry is $4.8 billion.
North Dakota can write a similar success story, Hopkins believes.
“Extraordinary volumes of gas are being flared, and what is being transported out of the State delivers low value for producers, royalty owners and the State,” Hopkins said in the company’s press release. “Bakken Midstream and our partners are bringing transformational change by developing not just natural gas infrastructure as North Dakota has known it, but infrastructure designed to add value in the State.”