North Dakota is putting a little skin in the game when it comes to attracting a petrochemical industry, with an announcement late Wednesday by the North Dakota Department of Commerce that the state is loaning the company $200,000.

Half the amount comes from the North Dakota Development Fund, and the other half from the New Venture Capital Program, both of which the North Dakota Department of Commerce administers.

The Development Fund, created in 1991, is intended to provide flexible funding to new or expanding primary sector businesses in the state. Its mission is to create new wealth by attracting outside investment. The Venture Capital program is also intended to provide flexible funding to new and expanding primary sector businesses.

Both funds require the company to submit an application and a business plan to a board, which decides whether to approve the loan. The terms of repayment and the interest rates on the loans are confidential, according to Scott Long, executive director of the Development Fund.

Shawn Kessel, deputy commissioner of the North Dakota Department of Commerce, said the reason for the loans was two-fold.

“We did that because we are trying to find alternatives to flaring in North Dakota,” he said. “And Bakken Midstream is a company that has a plan on the table to help minimize flaring. If they are successful, it would significantly minimize the amount of flaring that’s happening, and they would be creating an infrastructure that could help lead to a petrochemical industry.”

North Dakota regulators have charged the oil and gas industry with capturing at least 88 percent of the natural gas that’s produced alongside crude oil — a goal that has not been met by the industry for several months running.

From February to March, the most recent numbers available, flaring increased to 555,349 MCF per day, which translates to a capture rate of 81 percent.

Meanwhile, in November 2020, the industry’s target is moving to 91 percent.

A value-added natural gas industry would not only reduce flaring, but help the state capture more of the wealth chain for the commodities it is producing. That’s a goal that has been mentioned often by several North Dakota officials, including Gov. Doug Burgum.

“The state is pleased to invest in a company that is willing to develop the infrastructure projects needed to attract a value-added industry that benefits all of North Dakota.” Department of Commerce Commissioner Michelle Kommer said. “We look forward to continuing to work with Bakken Midstream to make our state a world-class producer of natural gas related products.

Bakken Midstream has said in a previous interview with the Williston Herald that it is considering construction of infrastructure for 12 projects. It is not itself building a plastics plant, and the projects don’t necessarily include a plastics plant. But the infrastructure could make the state more attractive to a petrochemical industry.

On its website, the company mentions the amount of gas the state is flaring, and points out the wasted resources could be used to start a profitable value-added industry. It further likens the Bakken to Alberta, Canada, which used to have similar issues, but today has a strong petrochemical industry.

“Today the State of North Dakota sent a strong signal that they are committed to working with Bakken Midstream to develop the natural gas infrastructure needed to fundamentally change the way this underutilized resource is handled in the state,” Bakken Midstream CEO Mike Hopkins said in a press release. “The State has been welcoming and inviting every step of the way and we’re excited to be working with a state that values the type of investment and development needed to build a value-added industry from the ground up.”

Hopkins said Thursday that the loans will provide essential start-up assistance.

“Currently all our efforts and funds are focused on identifying the most impactful project opportunities,” he said. “The funds will be used for Bakken Midstream’s working capital needs.”

Last week, the company announced it had recently completed an oversubscribed first round of venture capital funding, led by Steve LeBow, a primary financier for companies that include Costco Wholesale, PetSmart, Dick’s Sporting Goods and Ulta Beauty. Lebow is the Bakken Midstream’s founder, and has been studying the Bakken’s wasted resources as an opportunity for the past five years, the company’s website says.

Other investors participating in the initial funding round included Richard A. Galanti, longtime CFO of Costco Wholesale, Charles J. Philippin, former longtime Chairman of ULTA Beauty, George P. Orban, Co-Founder and Lead Director of Ross Stores, Inc., and Herald L. Ritch, Founder of DC Advisory.


Recommended for you

Load comments