UPDATED: Energy Transfer proposes crude oil pipeline from ND to Illinois

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.

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.

Oil industry says thanks to North Dakota, celebrates million-barrel milestone

More than 2,000 people gathered Wednesday, June 25, 2014, in Tioga, N.D., for an air show and celebration to recognize North Dakota’s milestone of producing 1 million barrels of oil per day. Amy Dalrymple/Forum News Service

TIOGA, N.D. – The oil industry said “thanks a million” Wednesday to North Dakota.

More than 2,000 people gathered in Tioga to celebrate the state’s recent oil milestone of hitting 1 million barrels a day, not far from where the state produced its first barrel.

The One Million Barrels – One Million Thanks celebration by the North Dakota Petroleum Council featured a free Southern barbecue, an air show by the Texas Flying Legends and historical oil exhibits.

Petroleum Council President Ron Ness said they wanted to hold the celebration where the state’s oil legacy began in 1951 with the first discovery well south of Tioga, the Clarence Iverson No. 1.

“There’s really no place other than Tioga,” Ness said. “This is where it all started.”

Oilfield geologist Kathy Neset, who hosted the party at Neset Consulting Service, highlighted a statement that was read in 1953 at the dedication for the Clarence Iverson well.

“The Williston Basin Discovery Clarence Iverson No. 1 opened a new era for North Dakota and reaffirmed the confidence of her people in the opportunities and future of this great state,” reads a historical marker near the site of the first well.

“Nothing could be more truer today than those words that were posted back in the 1950s,” Neset said. “We do have tremendous opportunities and we are affirming our faith in this state.”

Family members of Clarence Iverson attended the celebration, and some participated in a tour of the well site.

“It’s outstanding for the state,” Jim Iverson, the oldest son and one of five children, said of the million-barrel milestone.

Even though the Iverson family earned royalties from the oil development, they continued to work throughout their lives. Jim sold his business, the Super Valu in New Town, at age 81, and his brother Clifford, 82, of Tioga, continued farming until a few years ago.

“They didn’t depend on the oil. They all had their jobs and business interests,” said Deanie Iverson, Jim’s wife. “The oil was just a little bonus.”

Lorin Bakken of Tioga, the only known living descendent of the H.O. Bakken family, the well that gave the prolific Bakken formation its name, also was recognized at the celebration.

“It’s a great privilege for my family,” said Bakken, son of Henry O. Bakken and nephew of Harry O. Bakken.

By hosting the celebration, the industry wanted to thank the public for its patience and support, Neset said.

Gov. Jack Dalrymple told attendees that state leaders recognize the oil-producing communities have needs for roads, day care, law enforcement and other infrastructure. He said he’s confident state legislators will continue addressing those challenges when they convene in January.

“You have tremendous needs around here,” Dalrymple said. “Your state is responding to that.”

Ruth Hoover of Stanley, one of the people attending the celebration, said the oil activity has brought a lot of truck traffic where she lives, which is within a mile of six oil wells. But her community now has new businesses and the country is growing less dependent on foreign oil, Hoover said.

“As I see it, there’s more good than bad that’s come from it,” Hoover said.

Laura Rendahl traveled from her home south of Rugby to attend the celebration. She is a native of Watford City and grew up with the state’s first oil boom. Rendahl said it’s overwhelming to think about how big the oil industry has become with the recent 1 million-barrel-a-day milestone.

“I don’t think you can comprehend 1 million of anything,” Rendahl said.

Faces of the Boom: Worker on first N.D. well recalls novelty, danger of new industry

Raymond “Maggie” Magnuson, pictured Wednesday, June 18, 2014, in Tioga, N.D., worked on North Dakota’s first producing oil well, the Clarence Iverson No. 1. Amy Dalrymple/Forum News Service

TIOGA, N.D. – In 1950, northwest North Dakota farmer Raymond Magnuson decided to try working for an oil drilling crew to supplement his income.

“Rent was high-priced, $25 a month in Ray,” said 87-year-old Magnuson of Tioga, known to his friends and family as Maggie.

He began his oilfield career on the well that put North Dakota on the map as an oil-producing state: the Clarence Iverson No. 1 well, the state’s first successful oil well.

The brutal winter was too harsh for some out-of-state workers, he said. Magnuson, who started as a floorhand, remembers driving on a prairie trail to the well south of Tioga and getting stranded for two or three days without food during winter storms.

“Tough winter. Tough year. It ain’t like they got it nowadays at the rigs,” Magnuson said.

An April 4, 1951, test at the Clarence Iverson well marked the discovery of oil in North Dakota.

Spectators came from all around to check out the discovery well in Clarence Iverson’s wheat field. Some took samples of the oil in empty pop cans or bottles, he said.

“There were people around there all the time,” Magnuson said.

Magnuson said he was paid $1.41 an hour for working on the well. He worked eight-hour days, seven days a week, and continued farming near Ray.

His next job was another notable well in North Dakota – the H.O. Bakken well, the namesake for the Bakken formation. There, he earned 20 cents more an hour.

“That was a neat well, too,” Magnuson said.

After the wells were completed, it was customary for the mineral owners to take the crew out for dinner at the Missouri Club or another restaurant, he recalled.

Crew members who stayed from start to finish often received a $150 bonus, Magnuson said.

“It was a steady job. You had to keep your nose to the grindstone.”

Decades later, horizontal drilling and hydraulic fracturing unlocked the Bakken formation in North Dakota, pushing the state to the No. 2 oil-producing state in the country. Last week, the state Department of Mineral Resources announced North Dakota now produces 1 million barrels a day.

“It’s kind of unbelievable,” Magnuson said.

The North Dakota Petroleum Council is sponsoring a celebration on Wednesday of the million barrel milestone, including tours of the site of the Clarence Iverson well.

Magnuson spent 25 years working in the oil industry, either working for a drilling crew, driving truck or moving rigs. He had several back injuries during his career and saw a couple of guys get killed in drilling rig accidents.

“They didn’t have much safety rules in them days. You had to look out for yourself,” Magnuson said. “We were lucky there wasn’t more people killed.”

Magnuson, who has many family members who went on to work in North Dakota’s oil industry, has had people offer to take him to a current drilling rig site. But he hasn’t taken them up on their offers.

“I wouldn’t know what to do anymore,” Magnuson said. “Everything is run by a push button now.”

UPDATED: N.D. oil production hits 1 million barrels per day

WILLISTON, N.D. – North Dakota now produces 1 million barrels of oil per day, joining an elite club that includes Texas, Alberta and 19 countries.

The state saw a nearly 2.5 percent oil production increase in April, bringing North Dakota’s average daily production above the much-anticipated milestone to 1,001,149 barrels.

“We’re in the top 17 percent now, if you look at countries around the world, in terms of crude oil production,” Director of Mineral Resources Lynn Helms said.

Innovation has driven the increases in North Dakota’s oil production, said Sam Gorgen, an analyst with the U.S. Energy Information Administration.

While the state’s drilling rig count has stayed stable at around 190 rigs in recent months, operators have increased production by drilling multiple wells on one pad and other advancements, Gorgen said.

“It’s really been their success in improving efficiency and productivity rather than just raw increases in drilling activity which has helped make it happen,” Gorgen said.

Harold Hamm, CEO of Oklahoma-based Continental Resources, the leading operator in North Dakota, said Tuesday hitting 1 million barrels per day is another “huge milestone” for the Bakken.

“Initially, people didn’t understand the magnitude of what we were doing up there. Now, I think we’re beyond that,” Hamm said. “Most people do realize that it’s a very long lasting resource for America. It’s something that’s going to be with us a very long time, so they’re putting money into infrastructure.”

North Dakota, which produced its first barrel of oil in 1951, was producing about 100,000 barrels per day in 2006, when EOG Resources drilled what is known as the Parshall discovery well, considered by many to have unlocked the Bakken.

Today, with the use of horizontal drilling and hydraulic fracturing technologies, North Dakota is the No. 2 oil-producing state and accounts for about 12 percent of total U.S. oil production, the EIA estimates.

Estimates from North Dakota State University researchers show that 1 million barrels of oil per day contributes $50 million each day to North Dakota’s economy, including more than $11 million in oil and gas production and extraction taxes.

“North Dakota’s oil and gas industry has been a boon to the state’s economy,” said North Dakota Petroleum Council President Ron Ness, adding that drilling is expected to last 14 to 17 more years or longer with technological advancements.

Other facts highlighted Tuesday by the Petroleum Council, an oil industry trade group, include:

– Alaska, California, Louisiana and Texas are the only states to have ever produced 1 million barrels per day. Today, Texas is the only other state producing more than 1 million barrels per day, other than North Dakota, and is approaching 3 million barrels per day.

– The Bakken is one of 10 basins ever to have surpassed 1 million barrels per day.

– One million barrels of oil could fuel 48,272 cars with gasoline.

Helms, who released the preliminary numbers Tuesday, said he anticipates North Dakota oil production will continue growing through the end of 2017, when it will plateau around 1.5 million barrels per day.

Hamm projects North Dakota will peak at 2 million barrels per day in 2020.

John Harju, associate director for research for the Energy and Environmental Research Center at the University of North Dakota, estimates that current technology is recovering between 4 percent and 6 percent of North Dakota’s oil.

Meanwhile, researchers are seeing encouraging results from testing high-density drilling projects, and also are optimistic about enhanced oil recovery opportunities, Harju said.

“Big fields get bigger. This is a really big field and we’re still growing,” Harju said. “We just keep getting better and better wells.

Theodora Bird Bear, chairwoman of the oil and gas task force for the Dakota Resource Council, a conservation group, said the state is not adequately addressing the impacts of increased oil development on the environment or rapidly growing communities. Law enforcement challenges, crowded schools and spills related to oil development are among the impacts that need more attention, she said.

“They’re not measuring the full scale of impacts that are happening in western North Dakota,” said Bird Bear, who lives in rural Mandaree.

Gas also sets record

North Dakota also produced an all-time high of 1.1 billion cubic feet per day of natural gas in April, also based on preliminary figures.

Natural gas flaring decreased from 33 percent to 30 percent in April. Helms said he expected the flaring percentage to be even lower with the Hess Corp. Tioga Gas Plant expansion coming online. He said the expansion was not operating at full capacity until the end of the month and he expects to see more improvements when May figures are released.

The total volume of natural gas flared was 10.3 billion cubic feet, the lowest volume since November 2013, Helms said. In March, the state flared a total volume of 11.4 billion cubic feet, Helms said.

In April, 63 percent of North Dakota’s crude oil was transported by rail, down from 66 percent the previous month, said Justin Kringstad, director of the North Dakota Pipeline Authority.

The total volume of crude oil transported by rail out of the Williston Basin remained about the same at 700,000 to 715,000 barrels per day, Kringstad said.

Celebration

The North Dakota Petroleum Council is holding a free public event called “One Million Barrels – One Million Thanks” from 11 a.m. to 3 p.m. June 25 in Tioga. It includes a barbecue, aerial tours, of the area, an airshow by the Texas Flying Legends and tours of the Clarence Iverson No. 1 well. For more information about the event, visit www.ndoil.org/events.

Faces of the Boom: Williston’s new leader foresees ‘a better place’

Howard Klug, pictured Thursday, June 12, 2014, will take over as mayor of Williston, N.D., later this month. Klug, who has served on the Williston City Commission for six years, received 76 percent of votes in this month’s election. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – The next mayor of this oil boomtown says there’s still work to do to catch up with the city’s dramatic growth.

But he sees progress happening all the time.

“We’re getting better every day. I really believe that,” said Howard Klug, who takes over as mayor at the end of the month. “Williston is going to be a better place.”

About 76 percent of voters elected Klug to succeed Ward Koeser, who is stepping down as mayor after 20 years in the post. Klug, co-owner of The El Rancho Hotel, has served as a city commissioner for six years.

Klug, 56, a lifelong Williston resident, defeated newcomers Marcus Jundt and Jim Purkey in the election.

Koeser said he was pleased to see Klug elected, along with the two incumbent city commissioners who also won contested races last week.

“It made the statement that the people believe we’re on the right path,” Koeser said.

One of Klug’s first tasks will be to work on the city’s next budget, which likely will include additional police officers to protect the rapidly growing city. Klug also believes the city’s fire department will need to evolve to a full-time department, and he wants commissioners to discuss hiring a city manager.

Another top priority will be preparing for the next legislative session to convey the message that Williston and other western North Dakota communities need more revenue from the oil and gas taxes to build infrastructure.

“When the western part of North Dakota is healthy, the whole state will benefit,” Klug said. “We need more money to do that.”

While the rapid growth has challenged the city, Klug said he thinks the Bakken boom is good for Williston.

“It’s for the better. I’m a lot better off than I was 10 years ago,” Klug said. “There’s a lot of people better off than they were 10 years ago.”

Klug said he gets excited to watch young families move into his hometown, and he’s looking forward to doing what he can as mayor to support a new school building that voters approved last week.

Despite the influx of population, Klug said his neighborhood hasn’t changed much.

But how he gets around town with the increased traffic has.

“I do a little bit more planning of where I’m going to go and how I’m going to get there. No left turns,” Klug said.

Klug does get nostalgic for the days he could drive out of town and not see so many trucks and oil wells.

“I do miss the openness of the countryside. When you got up to the top of a hill and it was more rolling prairie than it was oil wells,” Klug said. “But there’s still places that you can go out and see those kinds of things in North Dakota.”

Williston residents elect lifelong resident next mayor

WILLISTON, N.D. – Voters here chose City Commissioner and lifelong Williston resident Howard Klug as their next mayor.

In complete but unofficial results, Klug had 76 percent of votes, while entrepreneur Marcus Jundt had 19 percent and Jim Purkey had 5 percent.

The three candidates battled to lead the rapidly growing boomtown and succeed Mayor Ward Koeser, who is retiring after 20 years.

Klug, co-owner of the El Rancho Hotel, had 2,923 votes, while Jundt, who moved to Williston three years ago to open restaurants, had 735 votes. Purkey, also a new Williston resident, had 187 votes.

More than 1,300 absentee ballots were requested in Williston for this election, said Williams County Auditor Beth Innis.

“It’s a large amount, a lot more than we’ve ever had,” Innis said.

Innis said she thinks the contested mayor’s race contributed to the increase in absentee ballot requests, as well as voters who said they didn’t want to wait in line.

Anna Denton, who moved to Williston three years ago from Alabama, voted for her first time in Williston on Tuesday. The mayor’s race and primary for state representative prompted Denton to get informed for the election.

“I care about the town,” Denton said. “This is where I want to plant my roots.”

Jake Fisketjon, a lifelong Williston resident, said the mayor’s race and the bond issue to construct a new high school brought him out to the polls Tuesday.

Fisketjon, who graduated from high school in 2010, attended classes in an old portable classroom at Williston’s Lewis and Clark Elementary. The $34 million bond issue would allow the district to relieve crowding.

“It’s tough to see our schools look like all portable modulars,” Fisketjon said.

Williston also had contested races for park board, school board and a county commission seat.

Williston voters approve new high school

WILLISTON, N.D. – Voters in Williston approved a $34 million bond measure to finance a new high school for the rapidly growing school district.

In complete but unofficial results, 2,738 Williston voters, or 76 percent, supported the bond measure, with 879 voters, or 24 percent, opposing it.

The Williston Public School District plans to construct a new high school, which would allow the current high school and middle school to be renovated to house grades 5-8. The new building would relieve crowding at Williston’s elementary schools.

More than 700 Williston students attended class last year in 54 portable classrooms, and the district is projected to grow by another 1,300 students in the next five years.

Watford City voters approve sales tax for hospital, rec center

WATFORD CITY, N.D. – Voters in Watford City have overwhelmingly approved a 1.5 percent sales tax to finance a new recreation and events center, a new hospital and other community projects.

In complete but unofficial results, 364 Watford City voters, or 85 percent, said yes to the sales tax measure Tuesday and 63 voters, or 15 percent, opposed it.

The results mean the McKenzie County Healthcare Systems board can move forward with plans for a new hospital, clinic and nursing home.

The funds also would help finance a proposed $56 million indoor recreation facility and events center and support community needs such as airport projects and affordable housing for essential workers and seniors.

Hearing planned on gas plant near Watford City

WATFORD CITY, N.D. – The North Dakota Public Service commission will hold a public hearing next week about a proposed natural gas processing plant that would be built about 13 miles southwest of Watford City.

The hearing on a proposal from ONEOK Rockies Midstream is at 10 a.m. June 18 at Teddy’s Residential Suites, 113 9th Ave. S.E., Watford City.

ONEOK proposes to construct the Lonesome Creek Gas Processing Plant, with the capacity to process up to 200 million cubic feet of natural gas per day. Once processed, natural gas liquids, containing products such as propane, butane and natural gasoline, will be transferred to on-site storage tanks prior to being sold to a pipeline. Residue gas, primarily methane and ethane, will be transferred to the Northern Border Pipeline.

The company proposes to start construction by July 1 and have the plant operational by the end of 2015 at a cost of about $280 million. The plant will occupy about half of a 160-acre plot.

During the hearing, the PSC will hear from the company and then take comments from the public. Comments from the public must be received at the hearing to be part of the official record.

For more information, contact the PSC at (701) 328-2400 or www.psc.nd.gov.

 

Renovated school provides affordable housing for Williston seniors

Shirley Trogstad, pictured Friday, May 16, 2014, lives in her former study hall room in Legacy at Central Place, the recently renovated historic junior high school in Williston, N.D. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – Shirley Trogstad’s new home is her former junior high study hall room.

The Williston woman is one of the first tenants of Lutheran Social Services Legacy Living at Central Place, the historic junior high school that was recently renovated into affordable senior apartments.

Lutheran Social Services Housing preserved the building to offer an affordable option for seniors facing escalating rent prices in the Oil Patch.

“I think it’s a blessing for our community,” said Trogstad, 73. “I hope there will be more of this kind of construction because of the need for it.”

The 44-unit complex has about eight to 10 units still available, said Lisa Richmond, community outreach coordinator with Lutheran Social Services Housing.

One factor causing a delay in filling the units is what Richmond calls “the Williston phenomenon.”

“No matter how much you tell them, they do not believe we still have apartments still available,” Richmond said. “They’ve been so used to this story of there being nothing available.”

Trogstad most recently lived in Williston Senior Apartments after the rent on her house increased more than she could afford.

The one- and two-bedroom Central Place apartments rent for $330, $653 and $783 per month, including utilities, for tenants who meet income requirements. The $330 apartments are full.

For at least 30 years, the rental prices may increase slightly as operating expenses go up, but tenants won’t see their rents suddenly double as other Williston seniors have recently experienced, Richmond said.

The apartment complex, designed by Fargo-Moorhead based Michael J. Burns Architecture, preserves historic features of the building, which was constructed in 1931 and is on the National Register of Historic Places. The former gymnasium is being renovated into a room for dining and special events.

Trogstad recognizes the original wood flooring from her former study hall in the hallway outside her new apartment.

“I’ve got fond memories of being in this building,” said Trogstad, who graduated from high school in 1959.

Trogstad especially likes the large, multi-paned windows in her corner apartment.

“It’s so spacious looking,” Trogstad said. “I have more pep being in this building because of the sunshine mainly, I think.”

The $10.6 million redevelopment was supported by federal, state and local government funding. The primary type of funding, tax credit financing, requires a longer process for applicants to get approved, Richmond said.

But once tenants qualify, they will not have to move out of the complex if their income increases in the future, Richmond said.

For more information, contact (701) 271-3207, housing@lssnd.org, or stop by the Lutheran Social Services Williston Program Center at 603 Main St.