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New Ethane Lateral Proposed For North Dakota's Canadian Exports

If state regulators give the green light this summer, construction could begin in September for a 47-mile, $85 million ethane pipeline lateral to boost volumes being sent to Alberta for its petrochemical complex.

Calgary-based Pembina Pipeline Corp.'s Vantage Pipeline unit proposes to add the line to its existing system taking ethane across the Canadian border.

This is one of several intrastate pipeline proposals that the North Dakota's Public Service Commission (PSC) has before it this summer (see Shale DailyJuly 27), and Vantage has indicated a desire to start up the new line early next year.

Separately, the PSC on Friday is holding a hearing on a $100 million 76-mile, 16-inch diameter crude oil pipeline and associated facilities, the Sacagawea Project, envisioning capacity of up to 200,000 b/d from various points south of Lake Sacagawea in McKenzie County to destinations with rail and pipe takeaway options north of the river in Palermo and Stanley, ND.

The PSC held a public hearing on the Vantage-proposed West Spur Lateral Pipeline, which would have a maximum capacity of 30,000 b/d, transporting liquid ethane. Vantage currently transports 20,000-25,000 b/d from the Hess gas processing plant in Tioga, ND, to Alberta.

As planned, the lateral would start at the Oneok Partners' Stateline gas processing plant where the company is investing $60-80 million in upgrades to separate out ethane at the site in Williams County. Vantage has a long-term deal to sell ethane to Nova Chemicals in Alberta.

Vantage's proposed lateral would end by connecting to its existing ethane pipeline system near Stady, ND, in Divide County. Commodity would then be shipped to Alberta where the western Canadian petrochemical firms convert it into ethylene.

Oneok's plant currently separates the raw natural gas liquids (NGL) from the gas stream and transports the NGLs via pipeline to various Midcontinent fractionation facilities. It is currently building de-ethanization towers that will allow 26,000 b/d of ethane to be produced at the Stateline processing plant, a company spokesperson told NGI's Shale Daily on Friday.

In considering the Vantage proposal, at least two of the three PSC members have endorsed the longer-term concept of North Dakota developing its own petrochemicals industry so NGLs could be used in the state. They support new ways to soak up more wellhead gas that is still being flared, but that won't happen because of greater ethane production.

"Flaring of natural gas in North Dakota is predominantly associated with gathering/processing constraints and not the marketing of tailgate products," Justin Kringstad, director of the North Dakota Pipeline Authority, told NGI’s Shale Daily. "Bakken gas is very rich in NGLs, and there are several companies that continue to look for petrochemical opportunities in the state."

Proposals for developing petrochemical capacity in the state surfaced last year, led by a $4 billion proposal by Delaware-based Badlands NGL LLC (see Shale DailyOct. 13, 2014), but none of the proponents has moved forward, and they reportedly have not been able to secure long-term ethane supply contracts, which would be essential for any serious projects moving forward.

Kringstad said he expected a "long period of high NGL production" in North Dakota, which he thinks "offers some attractive opportunities" for companies seeking to develop new NGL projects.

To thrive in the chemical industry and its offshoots, control of a feedstock is essential, Don Bari, a vice president with IHS Inc., told the Williston Basin Petroleum Conference last May as part of a preview of a detailed study of North Dakota's NGLs (see Shale DailyMay 27, 2014). Bari said North Dakota's wealth of NGLs makes the state a natural candidate for the development of downstream opportunities in the chemicals industry and all of its offshoots.

The three key chemical feedstocks -- ethane, propane and butane -- are found in abundance in the Williston Basin's liquids-rich light crude oil.

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