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Hess, Targa Partnering to Expand Bakken Natural Gas Processing Takeaway

Houston-based Hess Midstream Partners LP and Targa Resources Corp. are teaming up to construct Little Missouri Four (LM4), a 200 MMcf/d natural gas processing plant in North Dakota.

The 50-50 joint venture (JV) plant would be operated by Targa. It is being built at the company’s existing Little Missouri facility in McKenzie County. LM4 should be completed by late this year.

Construction costs for LM4 are estimated at about $150 million. In addition, Hess affiliates plan to invest $100 million for pipeline infrastructure to gather volumes for the plant.

“The Little Missouri Four Gas Processing Plant demonstrates our commitment to executing our strategy by providing additional Bakken basin processing capacity, which provides another layer of organic growth to meet our long-term targeted annual distribution per unit growth,” said Hess Midstream COO John Gatling.

For super independent Hess Corp., majority owner of the midstream business, the Williston Basin’s Bakken is its largest U.S. onshore operating area. Last fall, management said it was considering raising more rigs in the play this year.

“By executing infrastructure projects that provide more optionality to producers, Hess Midstream expects to continue to capture additional Hess and third-party volumes, reinforcing the competitive advantage we enjoy from our strategically located infrastructure in the core of the Bakken,” Gatling said.

Once LM4 is in operation, Hess Midstream would have an estimated 350 MMcf/d of total processing capacity in the Bakken, with export optionality north and south of the Missouri River. The midstream unit also is retaining an option to expand processing capacity  in the future by debottlenecking the Tioga Gas Plant. As a result, a planned turnaround at Tioga, scheduled for 2019, is expected to be deferred.

The Hess investment “underscores the company’s long-standing presence in North Dakota and commitment to our state,” said North Dakota Gov. Doug Burgum. “This processing plant will provide much-needed capacity at a time when North Dakota’s oil production nears record levels and associated natural gas production continues to climb.

“It’s a huge step in the right direction toward continuing to meet our flaring reduction goals and encouraging responsible energy development and infrastructure investment.”

The 50-50 JV is “to be fully integrated into our existing contract structure,” said Hess Midstream CFO Jonathan Stein. “This reinforces the competitive advantage we have through our long-term contracts with Hess Corp., which are 100% fee-based and designed to deliver stable and growing cash flows while providing downside protection.

“This strategic investment is expected to continue to enhance Hess Midstream’s organic growth trajectory with limited use of our balance sheet, while further increasing our dropdown timing flexibility.”

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