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MDU Resources Eyeing Midstream Infrastructure Opportunities

Bismarck, ND-based MDU Resources Group Inc. is eyeing opportunities to shore up infrastructure through its midstream pipeline and construction business units, the multi-state utility holding company’s executive team said.

A transmission pipeline expansion into underserved) northeastern North Dakota and pipeline takeaway capacity in the heart of the Bakken Shale in the western end of the state should be in place next year, said CEO David Goodin.

During a conference call to discuss 2Q2017 performance earlier this month, the CEO said the construction service unit is primed to take advantage of multi-billion-dollar road/bridge upgrade initiatives in states that include California and Oregon.

Since selling the exploration and production (E&P) business Fidelity E&P in late 2015, MDU has put more emphasis on the midstream and construction units to balance the natural gas and electric utilities, which serve eight states that stretch from the Pacific Northwest to Minnesota.

Based on growth opportunities, MDU has increased its construction services revenue guidance to $1.2-1.3 billion for 2017. 

"We continue to be excited about the long-term prospects for this business and are bidding quality projects," Goodin said.

Earlier this year California lawmakers passed the Road Repair and Accountability Act that authorizes $52.4 billion in infrastructure expenditures over the next 10 years, which MDU’s materials and services units is expected to be in a position to take advantage of.

"Oregon also approved a $5.3 billion, 10-year transportation act designed to relieve congestion and increase transit and cycling infrastructure,” Goodin said. “There has been a continued focus on infrastructure spending on the federal level since last year, and we are encouraged by the talk in Washington, DC, about the need for investment in our nation's infrastructure…

“We believe an increase in federal infrastructure spending has the potential to drive demand for construction materials in the near and the long-term."

Longer term, MDU’s two North Dakota midstream pipeline projects also may be expanded. The Valley Pipeline expansion project, headed up by MDU’s WBI Energy subsidiary, is a 38-mile, 40 MMcf/d pipeline that would move gas from eastern North Dakota into northwest Minnesota. It eventually could be expanded with more compression.

"We could see market improvement on that," the CEO said. "We certainly have sufficient commitments on that pipeline to date, and additional commitments over time as it is being built could only add to the economics."

In the heart of the Bakken, WBI Energy also is proposing to build the Line 27 Section pipeline to move incremental gas production. Said Goodin, "We have sufficient commitments to expand the infrastructure."

MDU earned $40.6 million (21 cents/share) in 2Q2017, versus a year-ago loss of $109.3 million (minus 56 cents).

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