Energy Transfer CEO Kelcy Warren is convinced that North Dakota isn’t likely to attract a petrochemicals industry, despite it being the No. 2 shale play in the nation, and its willingness to spend millions to try and attract a plant.
Petrochemical plants require a waterborne location to truly access global markets, Warren said during remarks at the Williston Basin Petroleum Conference.
But don’t count North Dakota out just yet, the state’s top oil and gas regulator says.
“It might be dangerous to disagree with Kelcy Warren, because he’s a pipeliner, and he’s spent his entire life building pipelines and moving hydrocarbons around the nation,” Helms acknowledged. “His understanding of the plastics business is that you have to be next to the ocean, so you can put your value-added, natural gas product on the water.”
But North Dakota would not be the only region to have a petrochemicals industry without direct immediate access to water. Helms was among a handful of state officials who went to tour the petrochemicals industry in Alberta.
“We saw that you can do it in the middle of a continent in one of the coldest places on earth,” Helms said. “And so, if you can produce plastic feedstock, and actual plastic particles in central Alberta and ship them to people that turn them into the products that we all love and consume, you can do it in North Dakota. So, we respectfully disagree.”
Helms believes the state is doing all the things it needs to do to attract a petrochemicals industry, and add at least some value to its natural resources before shipping them out of state.
Among these steps is research into underground salt cavern storages. Senate Bill 2014 allocates $9.5 million for examining underground storage of various hydrocarbons, including propane.
North Dakota is perennially short of propane during harvest, despite producing two to three times the amount of propane it needs, when grain drying is prevalent during the harvest season. Underground salt cavern storage might help solve that problem by giving companies cheaper, more economical storage options.
Helms has already had preliminary conversations with the propane industry about that possibility, and they have responded favorably to the idea.
“We’re funding research to prove that we can produce blue hydrogen here, and you know the plastic feedstocks are one of the off-puts of that,” Helms said. “And we’re funding some work on utilizing our ethane and research in that area.”
North Dakota has also approved measures setting up a the Clean Sustainable Energy Authority, to more directly pursue future energy opportunities in a low-carbon world, and it’s a source of venture capital using the legacy fund, to help build infrastructure across business sectors, including the oil and gas industry.
Warren, meanwhile, said Energy Transfer is looking for its next expansion business, and he has his eye on what he called the “chemicals business.”
“And when I say that, if you picture a chemistry, and you take an ‘ane’ to an ‘ene,’ like ethane to ethylene or propane to polypropylene, then you have a broader market,” Warren said. “And so what Energy Transfer is really doing is looking for ways to expand our market.”
Warren said that while he doesn’t believe the state will attract a petrochemical plant to the Bakken, he does believe it will still play a huge role in the value chain.
“Not refining it, but cracking it,” he said. “Knocking it into different chemicals, and selling it is something you will benefit from.”
The expansion into chemicals might not happen right away, Warren indicated.
“One thing we’re really good at at Energy Transfer is understanding what we’re not good at,” he said. “Yeah, so we’re not good at this. So, therefore, I want to buy somebody that is good at it. And with that, I want all those people to come with the deal.”
There’s just a handful of those types of deals to be had, Warren added.
“We’re patient,” he said. “And we’re just watching signals.”