Company proposes pipelineBISMARCK — A Texas company is proposing a pipeline that could transport up to 75,000 barrels of crude a day from North Dakota’s booming oil patch to U.S. supply hubs in Oklahoma and Illinois. Plains All American Pipeline LP of Houston said the 103-mile Bakken North Pipeline would run from North Dakota’s northwest corner through northeast Montana and to the U.S.-Canadian border. In Canada, it would link to an existing pipeline system capable of carrying crude to Oklahoma and Illinois.
By: By James MacPherson, The Associated Press, The Jamestown Sun
BISMARCK — A Texas company is proposing a pipeline that could transport up to 75,000 barrels of crude a day from North Dakota’s booming oil patch to U.S. supply hubs in Oklahoma and Illinois.
Plains All American Pipeline LP of Houston said the 103-mile Bakken North Pipeline would run from North Dakota’s northwest corner through northeast Montana and to the U.S.-Canadian border. In Canada, it would link to an existing pipeline system capable of carrying crude to Oklahoma and Illinois.
Plains pegged the project at between $160 million and $200 million and wants to complete it in late 2012, company spokesman Roy Lamoreaux said Thursday.
The 12-inch pipeline would begin in Trenton, in northwest North Dakota, at the Bakken shale formation, an oil-rich deposit within the Williston Basin. The U.S. Geological Survey estimates that with current technology, up to 4.3 billion barrels of oil can be recovered from the Bakken formation in North Dakota and Montana.
“We think the geography of this line is favorable,” Lamoreaux said. The pipeline would have an initial capacity of 50,000 barrels a day but could be expanded to move an additional 25,000 barrels, the company said.
Lamoreaux said the Bakken North Pipeline would connect with the company’s existing Wascana pipeline at the U.S.-Canadian boarder. That pipeline, which had been used to carry Canadian crude to the U.S., is not presently being used.
Under Plains’ proposal, the 107-mile-long idle pipeline would take U.S. oil north to storage facilities in Saskatchewan. For there, it would be shipped south on either Enbridge Inc.’s mainline or TransCanada Corp.’s Keystone pipeline to storage facilities in Patoka, Ill. and Cushing, Okla. The price of oil on the New York Mercantile Exchange is heavily affected by oil supplies at Cushing, which typically stores about 10 percent of the nation’s oil.
North Dakota was pumping a record 327,000 barrels daily in August, the latest figures available. State and industry officials say the daily production rate could hit 400,000 barrels a day within a year.
The state reached its pipeline, rail and refining capacity of about 189,000 barrels a day in October 2008, slowing rig activity and forcing producers to take steep discounts. Millions of dollars have been invested in North Dakota since then for infrastructure work including new rail shipping facilities and pipeline expansions.
So-called takeaway capacity is keeping pace with North Dakota’s oil production but just barely, said Justin Kringstad, director of the North Dakota Pipeline Authority.
The daily takeaway capacity for North Dakota and eastern Montana at present is about 460,000 barrels, including 338,000 that are piped, he said. About 100,000 barrels are shipped by rail daily and about 22,000 are hauled by trucks.
Kringstad said more than $1 billion in pipeline projects are either planned or under way in North Dakota that would add about 321,000 in shipping capacity. Plains’ proposed pipeline is in addition to those projects, he said.
Pipeline companies “only build projects when there is demand,” Kringstad said. “They are reacting to what’s happening on the producing side.”
Ron Ness, president of the North Dakota Petroleum Council, said additional export capacity is needed badly in the Williston Basin.
“Plain and simple, this gives producers more options,” Ness said. “Adding capacity always helps prices (for producers).”