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Bakken Midstream Investment Continues to Accelerate

In July, we wondered if regulatory changes in the Bakken would hamper growth or accelerate midstream investment and yesterday ONEOK Partners (NYSE: OKS) provided further evidence of accelerating investment to capture flared natural gas in the basin. OKS has committed to the development of a new 80 MMcf/d plant located in northwest Dunn County, called the Bear Creek Plant. This project joins a host of other ONEOK expansion projects designed to increase processing capacity in the region from 1.1 Bcf/d in 2013 to almost 2.1 Bcf/d by the end of 2016.

BTU Analytics, expects production in the region to continue to exceed local gathering and processing capacity over the next couple of years. However, this announcement, combined with other projects likely to be announced in the near future, will continue to close the midstream gap and reduce flaring in the region from current levels. Over the longer term Bakken producers will face challenges on where to ship all of this gas and the associated natural gas liquids as flared volumes decrease, but for now, the Williston Basin Interstate Pipeline, Alliance Pipeline, and Northern Border pipeline will be sufficient for producers to bring their natural gas to market once gathering and processing infrastructure for natural gas gets connected to the wellhead.

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Anthony (Tony) Scott has built an in depth understanding of the North American energy market by providing investment advisory services and leading teams of analysts focused on the North American energy complex. Mr. Scott has conducted hundreds of consulting engagements assisting producers, marketers, midstream, refiners and private equity understand how rapidly changing natural gas, natural gas liquids, and crude oil markets in North America would impact their assets.

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