Oneok announces expansions of new natural gas liquids pipeline, processing plant

Oneok's Demicks Lake I and II processing plants operate in McKenzie County.

A 200 million cubic foot per day natural gas processing facility in McKenzie County mothballed during the pandemic is back on the drawing board and will help ease the Bakken’s ongoing problem with excess gas.

ONEOK announced this week it plans to go forward with its Demicks Lake III plant. The company also announced at the same time that it will proceed with another moth-balled project, a 125,000 barrel per day NGL fractionator in Texas.

The Demicks Lake III project will cost $140 million to construct, and is expected to go online in 2023. It will be supported by fee-based contracts.

“Increasing producer activity and improving demand for natural gas and NGLs drove the decision to restart these attractive return projects,” ONEOK president and chief executive officer Pierce H. Norton II said . “We continue to align our capital investments with our customers’ needs and expectations, and remain focused on further enhancing the reliability of our infrastructure.

The project does bring much needed incremental capacity to handle the Bakken’s increasing natural gas production, which North Dakota Pipeline Authority Justin Kringstad has said is getting very near the ceiling of what current infrastructure allows.

The Bakken produces around 3 billion cubic feet per day of natural gas. That figure is going to keep rising as the play matures, and, at some point, a lack of gas processing infrastructure could begin to hamper oil production as companies must strive to avoid flaring in today’s ESG world.

Kringstad said ONEOK’s announcement is encouraging, and that its location is ideal.

“That is going to absolutely be necessary as we look at those long-term gas growth trends,” he said. “And having that third facility at that key point is going to be critical to continuing to meet our state’s gas capture targets.”

Demicks Lake III will bring ONEOK’s natural gas processing in the Williston Basin to a combined 1.9 billion cubic feet per day.

“Demicks Lake III will support producer development plans in the core of the Williston Basin while continuing our commitment to help customers reduce natural gas flaring and MB-5 will accommodate NGL volume growth from across our operations, including the Rocky Mountain region and Permian Basin.”

ONEOK has also recently brought online the $405 million Bear Creek expansion in Dunn County, which began operations at the beginning of November. That $405 million facility also added 200 million cubic feet per day to ONEOK’s processing capacity.

Kringstad also highlighted recent legislative efforts to help the situation with a west to east pipeline, which would carry the Bakken’s natural gas production to other parts of the state. The project will help spur value-added agriculture and other economic development projects, proponents have said.

North Dakota committed $150 million to help buy down the cost of building the overall $ a billion cost of the line, to make it more economically feasible.

Kringstad said regulators are working out the details on how that funding will be accessed and expect to have that completed in time for the Nov. 29 Industrial Commission meeting.

Kringstad said even though industry is close to the ceiling for natural gas processing capacity, he doesn’t expect to see much additional gas processing capacity added in 2022.

“Any announcement now that we see will likely be targeting that 2023 timeline,” he said. “So 2022 will be a pretty quiet year for gas processing expansion. There’ll be construction work going on and a lot of planning. But 2023 will be really when we start to see some incremental new gas capacity added to the region.

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