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Alliance-Aux Sable Tout Pipe for Moving Bakken NGLs

While there are competing proposals to break through the bottlenecks to bringing rich gas and natural gas liquids (NGL) in the Bakken formation to market, the Alliance Pipeline and Aux Sable NGL systems think they have the inside track. In the meantime, a substantial amount of NGL movement continues through rail and trucking.

Representatives from Alliance and Aux Sable reminded attendees at an industry conference in late April that they have the capacity to process 2.1 Bcf/d of gas and about 80,000 b/d of NGLs. Their market is the greater Chicago area, while other new takeaway pipelines are headed south and westerly to Colorado and other existing interstate pipelines. Last June an Aux Sable unit purchased EOG Resources Inc.'s condensate recovery plant and 83-mile Prairie Rose Pipeline connecting to Alliance at Bantry, ND (see Shale Daily, June 7, 2011).

"We transport on our system about 80,000 to 95,000 b/d of NGLs, and today we move about 14,000 b/d of that total from the Bakken," said Calgary, Alberta-based Jason Feit, Alliance's business development manager. "We see that number [14,000 b/d] growing quite quickly in the near future."

Although it stretches nearly 2,000 miles from Alberta to Chicago and on to Ontario in eastern Canada, Alliance is the only pipeline going through the Bakken with the capability to move commingled natural gas and NGLs. It has more than 450 miles of laterals connected to it, and thus, Feit said the pipeline is looking to add further links to the Bakken in addition to its pending Tioga Lateral, a proposed 80-mile pipeline now awaiting Federal Energy Regulatory Commission (FERC) approval.

The lateral would carry up to 106 MMcf/d of gas and NGLs and 61.5 MMcf/d of the capacity is already contracted for with Hess Corp. The project was filed with FERC earlier this year (see Shale Daily, Jan. 30) and is expected to get a final decision by August or September, Feit said. The gas pipeline will run from the tailgate of a Hess gas processing plant in Tioga, ND, to an interconnection with the Alliance mainline near Sherwood, ND.

This will be the Alliance system's second interconnection with a Bakken-based lateral, but if Feit and his colleagues have there way, it will not be the last.

Noting that the Alliance system is one of the few major pipelines in North America designed to carry liquids with a methane stream, Alliance Gas Supply Development Manager Bob Blattler told NGI's Shale Daily in an interview Wednesday that this allows the avoidance of field processing facilities "that would otherwise be necessary to get the residual gas and liquids streams to a market endpoint." It can be an economic, environmental and resource advantage in a place like North Dakota, which is short on oil and gas field workers, the Alliance managers contend. "It is a challenge to find the labor force to build the plants and operate them on an ongoing basis."

Feit and Blattler said that they have no forecast for when the infrastructure will catch up with the fast-developing Bakken play. But they are convinced that piping gas and liquids is still the most economic and environmentally benign way to move the product to market. Rail and then truck, which are relied on a lot now, are more costly and environmentally riskier, they contend.

Alliance aims to exploit the fact that its system is the only one in the region that is capable of carrying rich gas. "Alliance is uniquely situated to serve this growing natural gas production due to its ability to transport rich natural gas, which can then be processed at the Aux Sable Liquid Products extraction and fractionation plant at the terminus of the Alliance pipeline system in Joliet, IL," the company said in its FERC filing.

"If you had to choose, you would probably take pipe first, then rail, and trucks last," Feit said. "When Tioga comes on line it will have an impact on rail and trucking, but that said, with the time it takes to bring a lateral on line and the fast pace at which the Bakken production is developing, it is hard to know whether the development will expand faster than the infrastructure or vice versa. It is such a booming place at the moment it is hard to know.

"I think there is a chance that the oil and liquids infrastructure will catch up in the next few years, but there are a lot of moving pieces to that, such as will Keystone XL [the oil pipeline] move forward, what other projects will emerge, what will the future prices for oil and liquids be, and what else is going to drive development perhaps?"

Justin Kringstad, director of the North Dakota Pipeline Authority (NDPA), told NGI's Shale Daily that anything not going into Alliance for now is being shipped via rail or truck.

In addition to the Alliance-Aux Sable existing and proposed laterals, there are at least two other pipelines proposed to take NGLs out of the Bakken. Mistral Energy Inc. plans to construct the 10-inch diameter, 430-mile Vantage Pipeline, which would transport 43,000-57,000 b/d of ethane from Tioga, ND, to Empress, AB. The $290 million project, which is proposed for start-up during 3Q2013, would need regulatory approval from the U.S. and Canada. And Oneok Partners plans to construct the 12-inch diameter Bakken Pipeline, which would be between 525 and 615 miles in length. The approximately $700 million project would transport 60,000-110,000 b/d of unfractionated NGLs produced from the Bakken to Overland Pass Pipeline, a 760-mile NGL system extending from southwestern Wyoming to Conway, KS (see Shale Daily, Jan. 25, 2011).

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