New processing plant and pipeline to reduce gas flaring in North Dakota

Gas flaring.
Source: DollarPhotoClub

Tulsa-based ONEOK Partners, today announced plans to invest approximately $605 million to $785 million in the construction of a new Demicks Lake natural gas processing facility and related infrastructure in North Dakota that will help reduce natural gas flaring in the state.

Gas flaring is a serious problem for the oil and gas industry. When petroleum crude oil is extracted and produced from onshore or offshore oil wells, raw natural gas associated with the oil is produced to the surface as well. Especially in areas lacking pipelines and other gas transportation infrastructure, vast amounts of such associated gas are commonly flared as waste or unusable gas. Methane can also be flared when the price of gas is so low that it makes the processing of it uneconomical – which is frequently the case in shale exploration. Methane gas is a far more potent greenhouse gas than CO2. By flaring it, it gets transformed into a less dangerous CO2, but the flaring itself releases large quantities of CO2 into the atmosphere, exacerbating the greenhouse effect.

The ONEOK investment scheduled between now and the end of the third quarter of 2016 aims to tackle this problem by:

  • Building a new 200-million cubic feet per day (MMcf/d) natural gas processing facility – the Demicks Lake plant – and related infrastructure in northeast McKenzie County, North Dakota, which will process natural gas produced from the Bakken Shale in the Williston Basin;
  • Constructing additional natural gas compression to take advantage of additional natural gas processing capacity at the partnership’s existing and planned Garden Creek and Stateline natural gas processing plants in the Williston Basin by a total of 100 MMcf/d; and
  • Build approximately 12 miles of natural gas liquids (NGL) gathering pipeline from the Demicks Lake plant to the partnership’s existing Bakken NGL pipeline.

“The Demicks Lake plant and additional natural gas compression will increase our natural gas processing capacity in areas that continue to be developed aggressively by crude-oil and natural gas producers,” said Terry K. Spencer, president and chief executive officer of ONEOK Partners.

“The additional 300 MMcf/d in the Williston Basin will increase our natural gas processing capacity to approximately 1.1 billion cubic feet per day (Bcf/d) in the region. Pending board approval, we expect to announce additional Williston Basin natural gas processing capacity by the end of this year.”

In addition, the Garden Creek III natural gas processing plant, originally scheduled for completion in the first quarter 2015, is now ahead of schedule and slated for completion in the fourth quarter 2014.

“The completion of this plant, now a 120-MMcf/d natural gas processing facility with the additional capital investment in compression, combined with other ongoing investments in the Williston Basin, will provide the partnership with additional natural gas and NGL volumes while also creating long-term value for our unitholders,” said Spencer.

Since 2010, ONEOK Partners has constructed or is constructing seven new natural gas processing plants and related natural gas gathering infrastructure in the Williston Basin, which will increase the partnership’s natural gas processing capacity in the region by more than 10 times by the end of 2016, compared with 2010.

Demicks Lake natural gas processing facility and related infrastructure:

The Demicks Lake natural gas processing plant and related infrastructure are expected to cost approximately $515 million to $670 million and be completed during the third quarter 2016, and include:

  • $330 million to $430 million for the construction of the Demicks Lake natural gas processing plant; and
  • $185 million to $240 million for the construction of related natural gas infrastructure, including natural gas gathering pipelines and natural gas compression.

“Crude-oil and natural gas production in the Williston Basin continues to increase, and we remain committed to building essential natural gas gathering and processing infrastructure that will enable producers to capture and process these growing volumes and reduce natural gas flaring in North Dakota,” said Spencer.

“With an industry goal to reduce natural gas flaring to 5 to 10 percent of total production in 2020 in North Dakota, we will continue to commit resources to building critical infrastructure to meet this goal.

The completion of the Demicks Lake natural gas processing plant, combined with our Garden Creek II and III and Lonesome Creek natural gas processing plants currently in various stages of construction, further demonstrate our commitment to this cause.”

The Demicks Lake natural gas processing plant will be built in McKenzie County, North Dakota, the same county as the partnership’s existing Garden Creek natural gas processing plant. The Garden Creek II and III natural gas processing plants currently are under construction and expected to be completed in the third quarter 2014 and fourth quarter 2014, respectively.

When completed, the Demicks Lake natural gas processing plant will be ONEOK Partners’ second 200-MMcf/d plant in the region. In November 2013, the partnership announced plans to construct the Lonesome Creek plant, a 200-MMcf/d natural gas processing facility, expected to be completed in the fourth quarter 2015.

New natural gas compression to utilize additional Williston Basin natural gas processing capacity:

The partnership also will invest approximately $80 million to $100 million to construct additional natural gas compression to take advantage of additional natural gas processing capacity at its Garden Creek, Garden Creek II and III and Stateline I and II natural gas processing facilities by a combined 100 MMcf/d. This is scheduled for completion during fourth quarter 2015.

“Constructing additional natural gas compressor stations across our Williston Basin system will enable us to utilize increased processing capacities at our existing Garden Creek and Stateline I and II natural gas processing plants, as well as our Garden Creek II and III natural gas processing plants that are under construction,” Spencer said.

New NGL gathering pipeline connecting to the Bakken NGL Pipeline:

In addition, the natural gas liquids segment will invest approximately $10 million to $15 million to construct approximately 12 miles of NGL gathering pipeline connecting the Demicks Lake natural gas processing plant to the partnership’s Bakken NGL Pipeline scheduled for completion during the third quarter 2016.

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