Two Calgary-based companies announced Tuesday that they will construct a 77-mile pipeline lateral in North Dakota to transport liquids-rich gas from the Bakken Shale to the Midwest for processing.

Enbridge Inc. and Veresen Inc., which each own 50% of Alliance Pipeline LP, said in a joint statement that their respective boards of directors had approved Alliance’s plans to build the lateral to connect production from a Hess Corp. gas processing facility in Tioga, ND, to the Alliance mainline near Sherwood, ND.

Gas transported along the Tioga lateral will then be transported along the Alliance mainline to the Aux Sable Liquid Products (ASLP) processing facilities in Channahon, IL, for conversion to natural gas liquids (NGL) and delivery to the Chicago market hub.

“The need only continues to grow for pipeline infrastructure in the Bakken to transport producers’ liquids-rich gas to markets,” Alliance CEO Murray Birch said. “Our Tioga lateral will enable North Dakota producers to realize revenues from gas that might otherwise be flared and will also stimulate development of more receipt points and extensions.”

Hess reached an agreement with Alliance in June to serve as an anchor shipper on the Tioga lateral and signed a concurrent agreement with ASLP — which is jointly owned by Enbridge (42.7%), Veresen (42.7%) and Williams Partners LP (14.6%) — for NGL services (see Shale Daily, June 24).

Alliance announced Wednesday that it was holding an open season to identify further shipper demand on the Tioga lateral. The open season began at 9 a.m. Wednesday and will conclude at 4 p.m. Oct. 27, both times CDT.

On Monday the New York Times reported that the Bakken play leads the nation in the amount of natural gas that is flared. The newspaper said 30% of the gas produced in North Dakota is burned as waste.

According to NGI‘s Shale Daily Unconventional Rig Count for the week ending Sept. 23, the Bakken/Sanish/Three Forks play has enjoyed a 35% increase in activity from one year ago as the number of rigs operating has grown from 143 to 193.

Matching capacity on the Alliance mainline is included in the open season service offering. Alliance said it will also consider service requests requiring new Tioga Lateral receipt points as well as extension of the Tioga Lateral pipeline. The pipeline’s design capacity is 120 MMcf/d, which could be expanded. Planned in-service is July 2013, subject to approvals.

For information visit www.alliancepipeline.com and click on “Proposed Tioga Lateral Pipeline.”

None of the companies involved with the pipeline — Alliance, Enbridge and Veresen — disclosed how much the project would cost.

Hess announced in August that net production from the Bakken averaged 25,000 boe/d during 2Q2011, which was flat with 1Q2011 (see Shale Daily, Aug. 2). The company blamed a harsh winter and severe flooding in North Dakota for the decline in production.

Late last year Hess paid $1.05 billion in cash to acquire 167,000 net acres in the Bakken from TRZ Energy LLC (see Shale Daily, Dec. 30, 2010).

The New York City-based company — which now has the largest position in the Bakken with 900,000 net acres — has also been snapping up unconventional acreage in other shale plays.

Earlier this month Hess acquired almost 185,000 net acres in the Ohio portion of the Utica Shale and more than 18,000 undeveloped net acres in North Louisiana’s Haynesville Shale after agreeing to buy Marquette Exploration LLC for $750 million (see Shale Daily, Sept. 9). Hess also agreed to pay CONSOL Energy Inc. $593 million to acquire a half interest in CONSOL’s nearly 200,000 net acres in eastern Ohio (see Shale Daily, Sept. 8).