Transportation of crude and natural gas remains an important issue for producers in the Bakken. Two energy companies are making progress on projects that will increase the state's pipeline capacity.
Enbridge Energy Partners is working through the regulatory permitting process on an oil transmission line that expands their current system and may receive a siting permit from the North Dakota Public Service Commission as early as May. WBI Energy Transmission announced an open season for a project that would increase capacity for gathering and transporting natural gas produced in the Bakken.
Enbridge is in the regulatory process for a 612-mile oil pipeline called Sandpiper, which will span across the state of North Dakota starting at the Beaver Lodge Station south of Tioga, N.D. to Clearbrook, Minn. From there, the pipeline continues to Superior, Wis.
Sandpiper would transport 225,000 barrels of oil to Clearbrook through a pipeline 24 inches in diameter and 375,000 barrels to Superior by a larger, 30-inch line.
Sandpiper is slated to come on line at a time that Bakken production will eclipse the plateau of one million barrels of oil per day. The North Dakota Pipeline Authority estimates that 72 percent of oil produced in North Dakota was transported out of state by rail in January, while 21 percent was transported by pipeline.
Bob Steede, Enbridge's director of the North Dakota region, said the pipeline will give oil producers more options to transport out of the Bakken.
"We're giving Bakken shippers dedicated space to Superior, Wis.," Steede said. "They don't need to be fighting with Canadian oil for space."
Oil that currently reaches Clearbrook has to compete with oil coming in from Canada to make it to facilities in Superior. The Sandpiper Pipeline will only serve producers in the Bakken, so they can ship more efficiently to new markets. The route connects North Dakota oil with refineries in eastern Canada, the Gulf Coast and the Midwest, which gives oil producers more options to the get the best price.
Steede said these new options will make transportation by pipeline more competitive with rail transportation.
"It will increase their net-back," he said.
At this time, Enbridge is waiting for approval from the Public Service Commission in North Dakota, as well as similar regulatory bodies in Minnesota and Wisconsin. The company also made a filing with the Federal Energy Regulatory Commission.
Commissioner Julie Fedorchak from North Dakota said the company submitted the application for the Sandpiper project in January. From there, the staff at the Public Service Commission ensured that all of the documents needed for the application were included.
The Public Service Commission issues siting permits for transmission projects like a new pipeline. The commissioners ensure that such undertakings have a limited impact on the environment around them.
"We ensure these projects are done in a way that has minimum adverse effects," Fedorchak said.
Companies that apply to the PSC for a siting permit have to complete environmental and cultural studies on the areas that would be impacted by their construction. They consider the impact, if any, on endangered species in the area. They have to avoid locations such as schools and state or national parks. The route also has to be clear of places with cultural importance, such as American Indian burial grounds or historic buildings. Since the North Dakota portion of the Sandpiper pipeline stretches across three hundred miles, Enbridge's application, including environmental and cultural studies, filled two binders. The whole document was six inches thick, Fedorchak said.
The commission scheduled public hearings in communities impacted by the potential pipeline, which were held in Grand Forks, Devils Lake and Minot in late February.
Enbridge presented its case for the project at each hearing, and then the commission heard input from the public, whether that be opposition, support or suggestions regarding the project. Fedorchak said she expected a large turnout for this series of hearings since so many people will potentially be affected by the project. The Grand Forks hearing lasted all day with four to five hours just for public comments, Fedorchak said.
After the public hearings, the PSC worked through the public comments and requested late-filed exhibits from Enbridge that address the public's concerns.
"My goal is making sure that all the public comments are taken into consideration," Fedorchak said.
At the time of the interview, Enbridge still had four late-filed exhibits to turn into the commission, and Fedorchak expected to receive them by the end of March. One of the issues Enbridge had to address was a portion of the route that would potentially go through a research area being used by the University of North Dakota. Concerns were raised about the environmental impact the pipeline project would have on that area.
Once all of the late-filed exhibits are collected, the commission will review all of the new material. Fedorchak expects the commission to bring the application to a vote in early to mid-May.
Steede said Enbridge is actively acquiring right-of-way along the proposed route and has received 89 percent so far in North Dakota. Most of the line will follow the right-of-way established by Enbridge's existing pipeline.
Enbridge is finalizing the details for facilities on the Sandpiper pipeline. Design should be available in the middle of this year. Construction would begin in late 2014 or early 2015. The project will begin at existing locations, but will also include a new pump station at Lakota, N.D.
WBI Energy, a subsidiary company of the Montana Dakota Utilities Resources Group, initiated an open season for a 375-mile natural gas transmission line called the Dakota Pipeline in January. The proposed route would start in northwestern North Dakota and stretch across the state to into northwestern Minnesota.
The Dakota Pipeline will connect with two other lines in Minnesota, the Great Lakes Gas Transmission and Viking Gas Transmission, which will connect near the Emerson natural gas trading hub.
The project is estimated to cost between $600 million and $650 million.
Tim Rasmussen, a spokesperson for WBI Energy, said the project is timely considering the rise in natural gas production in North Dakota.
"There is a very steep forecasted increase in natural gas production coming out of the Bakken and the pipelines offering take-away capacity out of the area are running at high load factors," Rasmussen said in an email. "Our proposed pipeline will increase natural gas pipeline capacity out of the region and provide additional transportation opportunities for new production as it comes on line, as well as more capacity for natural gas captured through industry's efforts to reduce the flaring of this valuable resource."
According to a March 2014 report from the North Dakota Pipeline Authority, 18 percent of North Dakota natural gas was flared in January due to a lack of available pipelines. The Dakota Pipeline would increase capacity for transportation by 400 million cubic feet per day, with the ability to expand to 500 million cf/d, depending on user commitments.
"Through these interconnections gas can more directly access large markets in the mid-continent region of the U.S.," Rasmussen said.
Currently, the company is gathering contractual capacity commitments from potential shippers in its open season, which started on Jan. 30 and runs until May 30. WBI Energy will finalize designs and determine feasibility for the project based on the feedback received from this process.
"We have been encouraged by the interest the marketplace has shown in this project to date," Rasmussen said.
After the open season closes, Rasmussen said the company expects to spend up to two years on regulatory permitting and environmental analysis.
WBI Energy will go directly through the Federal Energy Regulatory Commission, and not the state PSC, for the permitting process, Fedorchak said.
Construction could begin in 2016 with a completion date in late 2017. Construction of all facilities would take the company about 12 months to complete, and laying the pipeline itself would take approximately four to six months, Rasmussen said.