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Oneok announces new gas processing plant for Bakken core

A natural gas flare on an oil well pad burns as the sun sets outside Watford City, North Dakota January 21, 2016. REUTERS/Andrew Cullen

WATFORD CITY, N.D. — Oneok announced this week it will construct a natural gas processing plant in McKenzie County, another project that will help North Dakota's oil and gas industry reduce flaring.

The proposed Demicks Lake plant will process 200 million cubic feet per day of natural gas northeast of Watford City, within the core of the Bakken where wells produce the most gas.

The project was approved by the North Dakota Public Service Commission in 2015, but Oneok suspended construction due to low commodity prices at the time.

The company's announcement that the Demicks Lake plant will move forward means North Dakota now has five natural gas processing plants or expansions that are under construction or in the planning stages.

"The Demicks Lake plant will provide critical natural gas processing capacity to accommodate increasing Williston Basin production, helping producers meet natural gas capture targets in North Dakota," Terry Spencer, Oneok president and CEO, said in a statement.

Ron Ness, president of the North Dakota Petroleum Council, said the location of the plant will help alleviate flaring on the Fort Berthold Reservation, where flaring is highest, as well as reduce pressure in the Keene area of McKenzie County.

"This is one we really needed to see," Ness said. "It's an area there where the gas is somewhat stranded."

North Dakota producers flared 273 million cubic feet per day of natural gas in December, or about 13 percent of gas produced, due to inadequate infrastructure.

Meanwhile, Oneok is developing pipeline projects that would connect natural gas liquids from the Bakken to markets in the Gulf Coast.

The company previously announced the 900-mile Elk Creek Pipeline, which would transport natural gas liquids from the Bakken to Kansas.

This week, Oneok also announced the 530-mile Arbuckle II Pipeline to transport natural gas liquids from Oneok facilities in Oklahoma to Mont Belvieu, Texas. Spencer said in a news release the projects will increase Oneok's ability to deliver natural gas liquids to growing markets in the Gulf Coast.

Justin Kringstad, director of the North Dakota Pipeline Authority, said pipeline transportation for Bakken natural gas liquids to the Gulf Coast has the potential to improve the pricing dynamics for North Dakota producers.

"If we can get North Dakota natural gas liquids to these major market hubs, that could have a positive impact on North Dakota pricing," Kringstad said.

The Demicks Lake plant is expected to be complete in the fourth quarter of 2019, according to Oneok.

Projects move forward

• Oneok also has proposed to expand the Bear Creek gas processing plant north of Killdeer from 80 million cubic feet per day to 175 million cubic feet per day. The Public Service Commission has scheduled a public hearing for that project at 10 a.m. March 21 at the High Plains Cultural Center in Killdeer.

• The Public Service Commission held a public hearing last week on a proposed expansion of the Arrow Bear Den gas processing plant near Watford City.

• Hess Midstream Partners recently announced plans to partner with Targa Resources Corp. to construct the Little Missouri Four plant to process 200 million cubic feet of natural gas per day in McKenzie County. The Public Service Commission had previously approved that project.

• The expansion of the Oasis Wild Basin plant is under construction in McKenzie County.

Increased capacity

The five projects would add a combined 815 million cubic feet per day in natural gas processing capacity, bringing the state's total processing capacity to nearly 3 billion cubic feet per day at the end of 2019, Kringstad said.

North Dakota produced an average of 2.08 billion cubic feet per day of natural gas in December, the most recent figure available. Natural gas production is expected to continue growing, and Kringstad projects North Dakota could need even more natural gas processing capacity by the end of 2021.