Monday, March 18, 2013

ND Pipeline Authority Webinar Summary - March 2013

The North Dakota Pipeline Authority hosted a webinar on March 8 titled "North Dakota and North American Production, Transportation and Markets". The presenters were Justin Kringstad, ND Pipeline Authority director, and Trisha Curtis from the Energy Policy Research Foundation. The notes below are from Kringstad's part of the presentation, which highlighted various topics relating to production and distribution of oil and natural gas in the Williston Basin. The complete webinar is available here.

Rig Count Trends

• While the number of drilling rigs has declined over the past few months, the number of well spuds has increased from just over 200 per month in January 2012 to nearly 300 per month in January 2013, reflecting an increase in efficiency. An additional 10 to 15 rigs are expected to be added by this summer, bringing the total to between 195 and 200. The total is expected to stabilize in this range between 2013 and 2016 and then begin to decline. 

Pipeline Construction Trends

• 2,353 miles of new pipe were installed in North Dakota in 2011, bringing the total to 15,070. Previous year totals were 12,717 in 2010 and 11,707 in 2009. The total for 2012 will be available in Q3 2013.

Oil Gathering Trends

• As of September 2012, 64% of North Dakota's crude production was being gathered by truck, with 36% being gathered by pipeline. The state's four major oil producing counties (Mountrail, McKenzie, Williams and Dunn) all reported significant increases in pipeline gathering in 2012. Williams County, for example, went from 5% pipeline gathering to nearly 25% pipeline.

Natural Gas Trends

• As of March, approximately 29% of the natural gas produced in North Dakota was being flared. Of this total, 13% was flared because of capacity limitations in existing gathering and transport infrastructure, while 16% was flared due to the lack of infrastructure.

• The rate of gas well connections has risen from approximately 30 a month in December of 2010 to just over 140 a month in December or 2012. From 2010 to 2012 gas connections lagged behind completion of first production wells. During the last half of 2012, however, the rate of connection was nearly the same as the rate of well completion. During that period the trend line for the number of wells without gas connections began to go down.

• Flaring from older wells has increased because of new higher pressure wells being connected to the same transport facilities. Additional pressure needs to be added to the line to accommodate older wells. In cases where the number of new wells is overwhelming the existing pipeline, a second line parallel line needs to be added ("looping"). Existing transport capacity can be maximized by maintaining the line to prevent the natural gas liquids from pooling in the bottom of the line (pigging).

• Six new or expanded gas plants are planned for 2013-2015 and processing capacity is expected to exceed the expected production levels.

• Natural gas pipelines in North Dakota include the Williston Basin Interstate Pipeline, the Alliance Pipeline and the Northern Border Pipeline. The Williston Basin Interstate Pipeline is owned by the MDU Resources Group and transports gas to various parts of the state and to storage facilities in Montana and Wyoming. The Alliance Pipeline, which originates in Canada, has a capacity of 1.51 billion cubic feet per day (bcfd) and carries gas to the Midwest markets. The North Dakota connecting point to the Alliance is near Palermo, with a connecting pipeline running from Tioga to Sherwood currently under construction. The Northern Border Pipeline is a 42-inch line with a capacity of 2.37 bcfd that originates in Canada and picks up gas from the Williston Basic Interstate Pipeline or directly from Bakken gas plants for transport to Midwest markets.

• Current production of natural gas liquids (NGLs) in North Dakota was over 50,000 barrels per day as of summer 2012. The state has the potential to produce 400,000 barrels per day, assuming no flaring, 8 gallons of NGLs per mcf and all liquids processed. NGLs currently are being transported by truck or rail. New pipeline projects include the Vantage pipeline, which would carry ethane to Canada, and a ONEOK pipeline, which would transport y-grade (raw) gas to Kansas for fractionation and further transport.

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