A large gas processing plant mothballed during the downturn is now back on the table, and it’s going to add substantial gas gathering and processing capacity to the core of the Bakken, where gas is present in higher percentages.
ONEOK has announced that it will build the suspended Demicks Lake plant, mothballed in 2015 amid crashing oil prices.
While it won’t solve all the state’s flaring issues, it is going to be a critical component along the way, according to industry leaders and state regulators.
Ron Ness, with the North Dakota Petroleum Council said the plant was a critical piece of infrastructure when it was proposed in 2014, and still is today.
“It’s in the heart of the Bakken, and it should have substantial benefit in that area,” he said.
The plant will be located in McKenzie County near the Fort Berthold area, which has had the highest amount of flaring in the state. As much as 29 percent of gas produced in Fort Berthold has been flared in 2017, according to state regulators. In December, flaring was 20 percent of gas produced in that area.
Statewide, North Dakota flared 284 million cubic feet of gas in total in December, the most recent figures available, or 13 percent of produced natural gas. That put industry just inside the state’s gas capture target of 85 percent, which increases to 88 percent in November.
North Dakota Pipeline Authority Justin Kringstad said he has already added the announced new capacity to his forecasts, which shows gas gathering and processing capacity finally equal to or greater than production.
That’s just on paper, however. The picture on the ground is more complicated than that, Ness pointed out. Topography will still require that flaring reduction be tackled region by region, and project by project.
The North Dakota Petroleum Council recently revived its flaring task force to deal with flaring challenges in the state, and plans to meet in Denver in the spring, to continue discussion of industry-coordinated efforts to reduce flaring.
“Demicks Lake is another example of midstreamers and industry stepping up to get this infrastructure built,” Ness said. “We want to see continued announcements like this. It’s all good for growth in the Bakken.”
Demicks Lake already had its certificate of site compatibility from the North Dakota Public Service Commission, issued in March 2015. The certificate is good for four years from the date it was issued, so the company will not have to return to the PSC or revisit any of its studies, as long as the project is exactly as the one approved.
According to its original application, Demicks Lake was to be located on 160 acres in McKenzie County about 13 miles northeast of Watford City. Total design capacity was for 400 million cubic feet per day, using two separate cryogenic turboexpander units, referred to as a “train” in the industry.
The plant was to begin with just one train, which would process 200 million cubic feet per day. The second would be built if and when commitments warrant.
Cost estimates were $321 million in 2015. That new estimate is $400 million, according to a press release from the company.
The new plant is expected to begin operating by the fourth quarter of 2019.
ONEOK owns several other natural gas processing facilities in the Bakken, including the Grass Plant in Sidney, Garden Creek near Watford City and Lonesome Creek. Its total processing capacity, once Demick’s Lake is complete, will be 1.2 billion cubic feet per day.
Demick’s Lake was announced as part of a $2.3 billion capital expenditure plan for ONEOK now through 2020.
That plan also included a 400,000 barrel per day natural gas liquids pipeline to take NGLs from Oklahoma to Texas, as well as a 125,000 bpd NGL fractionator for an existing plant in Texas.
In January, the company also announced the $1.4 billion Elk Creek Pipeline to take 240,000 barrels per day of NGLs from the Bakken to Kansas.