A unit of Bismarck, ND-based Prairie Companies LLC said Wednesday it would become the state’s first liquefied natural gas (LNG) producer starting this summer.

In a state with robust associated natural gas production that is accelerating as an offshoot of record crude oil production, North Dakota LNG LLC’s (NDLNG) announcement was lauded by state officials, including Gov. Jack Dalrymple in ceremonies at the state Capitol in Bismarck.

As part of the announcement, Hess Corp. was identified as winning the gas supply contract for the LNG production.

Located in Tioga, near a Hess gas processing plant (see Shale Daily, Dec. 17, 2013), the LNG facility will produce up to 10,000 gallons daily, and a second phase will add 66,000 gallons of capacity by the end of this year.

Dalrymple said the state-of-the-art facility will play “an important role” in efforts to cut the amount of flared gas in the state and convert gas feedstock into “value-added” fuels.

The in-state LNG source is viewed as a possible means for operators now flaring gas to not only find a market for it as LNG, but also use some of it in lieu of more polluting diesel in their wellsite operations. Prairie Companies touted the new LNG supplies as a way for operators to reduce their costs and their impact on the environment.

“This historic venture will allow NDLNG to quickly provide oil and gas operators in the Bakken and across North Dakota with a cost-effective and reliable source of alternative fuel,” said Prairie CEO Patrick Hughes.

Company officials said Plum Energy will develop the small-scale LNG production facilities, managing the initial operations. SST Process Solutions Inc. will provide the technology for operating the liquefaction equipment.