As steadily increasing oil and gas production continues to outpace the ability to transport those resources to market, an independent, Colorado-based midstream company is gauging interest in the potential construction of a new pipeline to help alleviate some of the problem.
Saddle Butte Pipeline announced recently it is seeking commitments from shippers to determine whether or not to proceed with construction of the High Prairie Pipeline, a 450-mile system of 16-inch diameter pipe capable of transporting 150,000 barrels per day to Clearbrook, Minn.
Saddle Butte currently operates a gathering system - a system that transports oil or gas from the wellhead to a transportation point - on the Fort Berthold Indian Reservation.
As part of the High Prairie Pipeline project, Saddle Butte is also proposing construction of two laterals. One lateral, 17 miles in length, would originate in Johnson's Corner in McKenzie County, while the other, an eight-mile lateral, would start near Robinson Lake in Mountrail County. Those laterals would connect to the High Prairie Pipeline.
In addition, Saddle Butte says it is considering several truck receiving stations and interconnect points along the route of the pipeline.
In order to be awarded capacity on the pipeline, prospective shippers must commit to transport a minimum of 3,000 barrels per day for a minimum of five years.
A minimum of 10 percent, or 15,000 barrels per day capacity, will be reserved for uncommitted shipper volumes.
Once Saddle Butte determines that there is sufficient interest in the project, it will proceed with construction of the pipeline, which is currently anticipated to come online in late 2013. The deadline for the "open season" on shipping agreements is Friday.
"While oil production in the Bakken is currently averaging more than 500,000 barrels per day and forecasted to exceed 1 million barrels per day by 2020, North Dakota's pipeline capacity has not kept pace," said John Early, president and CEO of Saddle Butte.
The High Prairie project would supplement current expansion projects such as the Enbridge project in efforts to transport petroleum to the key market hub of Clearbrook, which is the junction point of the Lakehead System, the Minnesota System and the North Dakota System. From Clearbrook, oil is transported to cities that harbor large refineries such as St. Paul.
Since the High Prairie project does not cross any international borders, it will not be subject to clearing hurdles with the U.S. State Department that snagged the proposed Keystone XL project.
Saddle Butte speculates that the project could create as many as 2,500 manufacturing and construction jobs. In addition, the takeaway capacity increase could mean replacement of as many as 750 truck trips per day on North Dakota roads.
The company estimates construction of the pipeline to be complete within about six months, once under way. Pending regulatory approvals, a tentative timeline has the project beginning in May or June 2013.