Natural Gas Pipeline to the East
North Dakota’s top elected officials are considering a state contribution to a proposal to build a large natural gas pipeline to provide additional gas to the eastern part of the state.
Governor Doug Burgum and legislative leaders have pitched the idea that they say would solve two problems. Natural gas production in the Bakken continues to increase, which means either additional pipeline takeaway capacity will be needed or the state must find ways to use the gas in North Dakota (or both). The other issue for eastern North Dakota is that the lack of abundant gas supply means the state is not able to compete for ag processing industries that require large amounts of natural gas.
The ND Legislature is proposing to initially offer $150 million as seed money to stimulate interest among pipeline companies in developing a project across the state's northern tier that could deliver 250 million cubic feet of natural gas or more per day to eastern North Dakota. It’s estimated such a pipeline would cost around $1 billion. The state’s contribution would improve its economics to attract shippers who are looking for the cheapest gas transportation available, and to reduce the transportation expense for end users in the east who are currently finding cheaper options in places like Iowa and Minnesota.
Grand Forks Senator Curt Kreun, who chairs the Senate Energy Committee, said the pipeline would be a win-win for the state, providing natural gas takeaway capacity to western North Dakota to avoid constraints on oil production, while delivering additional gas supply to support value-added agriculture projects in eastern North Dakota.
"This project provides energy where it's not being served at this time, and in other areas of the state that are now or in the near future in short supply,” Kreun said. “In our part of the state some of our large users are already looking for additional energy, both electricity and gas, for that matter.”
Kreun said a pipeline that roughly parallels Highway 2 could potentially provide natural gas service to unserved communities, while providing additional gas to under-served areas.
Justin Kringstad, director of the ND Pipeline Authority, said if additional natural gas takeaway capacity is not developed, oil production will suffer. He said producers will be forced to cut back production because gas-to-oil ratios are increasing, and flaring the gas is no longer an option. Kringstad said a 250 million cubic foot/day pipeline would allow an additional 100,000 barrels of oil production per day. That would translate into additional tax revenue approaching $200 million per year, so the state and local units of government would see a rapid return on the investment.
Kringstad said $150 million is just a fraction of the cost of constructing a large pipeline to the east, but the contribution would improve the economics for private sector companies that would build the pipeline and the producers that would use it.
“A billion dollar project number would have a dollar rate associated with it,” Kringstad said. “If the cost were to come down to say $800 million through matching grants, that transport rate goes from $1.00 down to say 70 cents or 75 cents, and so that is what would be out in the marketplace for folks to commit to.”
Some western leaders expressed concern that delivering additional gas to eastern ND would allow it to compete with the west for value-added energy projects. But Lynn Helms, director of the Department of Mineral Resources, said gas liquids, which would stay in the west, combined with western ND geology (see map of potential salt caverns), would mean those projects could only be developed in the west.
The pipeline proposal has the support of the governor's office. Lt. Governor Brent Sanford, speaking to attendees at WDEA's 2021 annual meeting, said the project would benefit many parts of eastern North Dakota.
"From the Bakken through Minot, Rugby, Devils Lake to Grand Forks and down the I-29 corridor to Fargo," Sanford said. "It helps those areas with the fact that they don't have gas to expand, and a lot of those communities in the middle (that don't have gas service)."
Issue Updates11/12/21 - Legislature Okays $150M for Pipeline
10/29/21 - Western leaders discuss natural gas pipeline
10/22/21 - Rugby representative likes natural gas pipeline
10/15/21 - Natural gas pipeline to Eastern ND proposed