North Dakota’s Industrial Commission (IC) has asked the state legislature to authorize pursuing options to add oil and natural gas storage for the Bakken Shale.
The governor-led commission “pre-filed a bill for next year’s legislature to take on permitting of oil, gas and natural gas liquids storage,” said Department of Mineral Resources director Lynn Helms. “Those are critical infrastructure pieces.”
To convert part of an oilfield for storage would require approval by the same percentage of surface landowners (55%) as required in field unitization, Helms said. All of the landowners would have to be “equitably compensated” by the storage operators.
When at least 55% of the landowners approve pore leasing space for gas storage or a salt cavern for natural gas liquids (NGL), the IC could create a unit to pull all of the space together.
There is a legislative vehicle “to move forward and a report is due from the Energy and Environmental Research Center at the University of North Dakota when lawmakers convene next year,” Helms said. A second report on salt cavern storage is to be released to the legislature about the same time.
Early last year, the EERC concluded that if certain issues were resolved, injecting the gas produced with the Bakken oil into underground formations and later withdrawing it could allow for more oil production and help meet state-mandated gas capture goals.
Helms said the best potential locations for salt cavern storage locations are between Williston, in the far northwest corner of the state, and Minot in the north-central area. It would need to be along railroad, highway and pipeline routes within proximity of a large workforce.
“All of that exists north of Lake Sakakawea and between the two cities,” he said. Caverns are typically used for storing NGLs for petrochemicals before they are processed and shipped to market. “Salt caverns worldwide are the way to store ethane; it looks like from some very preliminary work that it is feasible and we have the geology to support it.”
Currently, North Dakota has no underground storage for oil, NGLs or produced associated gas. However, in the Montana portion of the Williston Basin is the largest underground gas storage facility in North America at 164 Bcf capacity, the Baker Storage Field.
“At his time, there are no plans for residue gas storage in North Dakota,” said North Dakota’s Justin Kringstad, director of the Pipeline Authority. “The Baker storage is used by both Canadian and Williston Basin shippers.” Kringstad said he was not aware of any plans to expand Baker, which has ample capacity.
Kringstad and Helms earlier this year attempted to quantify the state’s total available oil storage, considering leased aboveground storage tanks and working tankage on various pipeline systems. “The rough estimate was well over 20 million bbl of combined oil storage,” Kringstad said.
Since early this year, Bakken producers have been working to build more tank farms for oil storage as a hedge against the future when prices turn upward and demand continues to slow.
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