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Energy Transfer proposes crude oil pipeline from ND to Illinois

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WILLISTON, N.D. - Energy Transfer Partners announced this week it has commitments from shippers to move forward with an 1,100-mile crude oil pipeline from North Dakota to Patoka, Ill.

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The Bakken Pipeline would transport 320,000 barrels of Bakken oil per day to Illinois, where shippers would be able to access markets in the Midwest or connect with markets on the East Coast or Gulf Coast.

The announcement comes on the heels of Gov. Jack Dalrymple’s Pipeline Summit, during which he said the state’s crude oil pipeline capacity is expected to hit 1.4 million barrels of crude per day by the end of 2016, more than double the current capacity.

Currently, nearly two-thirds of the state’s oil is transported by rail, a percentage that has been higher depending on market conditions.

“Although rail has played a very critical role in helping us to market our petroleum during this period of rapid growth, we know that over the long haul, we’re looking at the safest and most efficient ways of marketing oil and gas,” Dalrymple said during Tuesday’s Pipeline Summit.

North Dakota, which recently began producing 1 million barrels of oil per day, can transport 623,000 barrels per day by pipeline, including oil that’s transported to the Tesoro refinery in Mandan, according to the North Dakota Pipeline Authority.

By the end of this year, that pipeline capacity will increase to 783,000 barrels per day.

Despite the increase in the state’s oil production, companies including Koch Pipeline Co. and ONEOK Partners recently abandoned crude oil pipeline projects in North Dakota because they didn’t get sufficient commitments from shippers.

The latest announcement from Texas-based Energy Transfer Partners is significant because the company said it does have those commitments. The company said in a news release that it has begun ordering steel and negotiating construction contracts.

Where in North Dakota the pipeline would originate was not mentioned in the announcement, and a media spokeswoman did not return a call seeking comment Thursday.

The project would need regulatory approval from the North Dakota Public Service Commission, which had not yet received an application, Chairman Brian Kalk said.

If the project is approved, it would transport more than three times the amount of North Dakota crude oil that the proposed Keystone XL pipeline would transport.

Energy Transfer said it plans to develop a rail terminal facility in Illinois to access East Coast refineries. The company also plans to convert an existing natural gas pipeline to transport crude oil from Illinois to the Gulf Coast. The company said it expects to have the pipeline in service by the end of 2016.

Also this week, the Public Service Commission approved Enbridge’s Sandpiper pipeline, a 616-mile project proposed from Tioga to Clearbrook, Minn., and Superior, Wis.

The pipeline, which would transport 225,000 barrels per day, has commitments from shippers, but still needs regulatory approval from Minnesota and Wisconsin, as well as federal approval.

Another Texas-based company, Enterprise Products Partners, announced this week that it proposes to build a 1,200-mile crude oil pipeline from the Bakken to Cushing, Okla., with the capacity to transport 340,000 barrels per day.

That project, however, is in an earlier stage than the announcement from Energy Transfer Partners. Enterprise is still seeking commitments from shippers to construct the pipeline to Oklahoma. It’s also projected to be in service by the end of 2016.

The Public Service Commission has not received an application from Enterprise, Kalk said.

Justin Kringstad, director of the North Dakota Pipeline Authority, said it’s encouraging to see more investments in crude oil pipelines as the state’s oil production continues to rise.

“They’re going to be necessary as this play continues to mature,” Kringstad said.

The timelines and the volumes for the proposed projects will be determined by the amount of interest from shippers, Kringstad said.

“That’s where the industry will ultimately decide,” he said.

The Pipeline Authority says these crude oil pipeline projects are confirmed and moving forward:

  • True Companies is developing the Butte Loop pipeline that will transport 110,000 barrels per day to Guernsey, Wyo. It’s expected to be in service the third quarter of this year.
  • Hiland Partners is developing the Double H pipeline, expected to be in service the last quarter of this year. It will transport 50,000 barrels per day from North Dakota to Guernsey, Wyo., and is expandable up to 100,000 barrels per day.
  • Both of those pipelines will connect to the Tallgrass Pony Express Pipeline, which goes to Cushing.
  • Plains All American began shipping oil in May on the new Bakken North Pipeline, Kringstad said. The pipeline goes north to Canada and then connects to an Enbridge pipeline that brings it back to Clearbrook. The pipeline has a capacity of 40,000 barrels per day and is expandable up to 70,000 barrels

The other major crude oil pipeline that remains a question mark for North Dakota is the Keystone XL, which would transport up to 100,000 barrels per day of North Dakota crude from an on-ramp in Baker, Mont., if it receives federal approval.

 
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Amy Dalrymple

Amy Dalrymple is a Forum News Service reporter stationed in the Oil Patch. She can be reached at adalrymple@forumcomm.com or (701) 580-6890.

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