Infrastructure issues in the Oil Patch

Apr 17, 2018

State mineral resources director Lynn Helms.
Credit Dave Thompson / Prairie Public

North Dakota's oil patch could see some issues with a lack of infrastructure to get oil and natural gas to market.

Since the Dakota Access Pipeline was completed, the premium charged against Bakken crude oil has dropped.

It was at its highest when a lot of oil was being transported by rail – and that meant discounts were taken because of transportation costs.

But as oil production is expected to increase, North Dakota could see a swing again toward rail transport of crude.

"Our projections, based on rig count growth,  as well as completing the 900 uncompleted wells, is that we will exceed the Dakota Access capacity in two years or less," said state mineral resources director Lynn Helms. "What that means, unless another project comes along, is price differentials will start to grow again. That will be a damper on increased activity."

Energy Transfer Partners – the parent company of the Dakota Access Pipeline – has talked about capacity expansion – but has not announced firm plans to do so.

As for natural gas, North Dakota is rapidly reaching its capacity for processing gas.

"We do expect that, over the next several months, gas production will exceed current processing plant capacity," said state pipeline authority director Justin Kringstad.

There are 5 natural gas processing plant projects either on the drawing board or under construction.

Kringstad says in the near term, to the end of 2018, it wll be a challenge for the industry to make sure the plants they're connected to has adequate capacity to handle the gas being delivered to it.