< PreviousBASIN BITS | Spring 2020 11 Lessons Learned from the Pandemic: The Only Thing Certain is Uncertainty that happened to huggers and handshakers was maybe a bad cold or the flu. But with the prospect of contracting a potentially lethal disease, will it ever be the same? The economic damage will be profound. The rig count in North Dakota was already plummeting in April, and many of the new wells that were being completed were imme- diately shut in. With more than half of North Dakota’s tax revenue attributable to the oil industry through production, extraction, and sales taxes, the coming budget crunch will be a tremendous test for Gov. Doug Burgum and the state legislature. Will any good come from the pandemic? Undoubtedly, we will be better prepared if, and when, another deadly virus begins to spread. People have also developed a new- found appreciation for the doctors, health care workers, and medical researchers who are helping us get through this nightmare. We’ve also developed an appreciation for the truly important things in life—our fami- lies, friendships, and quality of life—and the freedom to enjoy them. The lesson everyone should learn from this experience is that noth- ing in life is certain. The world could end to- morrow, so live every day to the fullest. in the ensuing days, it became clear no one could say with any certainty when school would resume. Based on advice from the Centers for Dis- ease Control that public gatherings of 10 or more people temporarily cease, the shutdown gradually spread through society. Basketball tournaments and other sporting events were immediately cancelled, church services were suspended, air travel all but ceased, and even- tually bars, restaurants, and other businesses closed to the public. Citizens were urged to “shelter in place,” or self-quarantine if they felt ill. But perhaps the scariest part of all was the pervasive uncertainty—no one could say when society would return to normal. The reality is life will never be the same. It’s another 9/11-like event, not just for the United States, but for every country on Earth. The world will be forever changed. The terms “social distancing” and “com- munity spread” will always be part of the American lexicon. Stay six feet apart (or two meters, if you’re Canadian). It’s difficult to imagine society will return to previously ac- cepted standards, even after the pandemic ends. We’ve known for a long time that hugs and handshakes spread germs, but the worst Opening Remarks N orth Dakotans have perse- vered through lots of ups and downs in the state’s history, but the reversal of fortune and truly frighten- ing events of this year will likely change the state forever. North Dakota was slammed in March with a double-barreled punch to the gut. Early in the month, negotiations broke down between Russia and Saudi Arabia about oil supply cuts aimed at stabilizing oil prices, which had begun to decline due to falling global demand resulting from a deadly, new virus spreading in China. In response to the failure to reach a deal with Russia, the Saudis launched an all-out price war. Oil prices and stock indexes took a nosedive after Saudi Arabia stunned the world by offering a discount in oil prices of $6 to $8 per barrel to customers in Asia, the U.S., and Europe. Concern about plummeting oil prices sent shockwaves through North Dakota oil producers and policy makers, but in mid- March, the state and the world were smacked by an even bigger punch. The novel coronavi- rus that started in China had begun to spread rapidly across the U.S., arriving in North Dakota with the announcement on March 11 that a Ward County man in his 60s had contracted COVID-19, the disease associated with the virus. On a Sunday night just four days later, “out of an abundance of caution,” Gov. Doug Burgum ordered the closure of North Dakota’s Kindergarten to Grade 12 schools in an effort to slow the spread of COVID-19. Everyone hoped the shutdown would be short-lived, but with confirmation of additional cases From the Desk of the Western Dakota Energy Association’s Executive Director Geoff Simon Executive Director Western Dakota Energy Association “ The novel coronavirus that started in China had begun to spread rapidly across the U.S... The economic damage will be profound... With more than half of North Dakota’s tax revenue attributable to the oil industry through production, extraction, and sales taxes, the coming budget crunch will be a tremendous test for Gov. Doug Burgum and the state legislature.12 The Official Publication of the Western Dakota Energy Association BE SEEN IN THE BAKKEN AND BEYOND Did you know Basin Bits is distributed to thousands of key industry players across the U.S. and Canada? Put your best foot forward and expand your reach by putting your product right in front of these decision-makers. Contact sales@matrixgroupinc.net or call (866) 999-1299 to book your space today. Wise Roads Project Aims to Reduce Disruption in Oilfield Trucking COMPLIMENTARY PLEASE TAKE ONE! The Official Publication of the Western Dakota Energy Association BASIN BITS Fall 2019 Infrastructure Investments: Planning for Future Growth in the Bakken COMPLIMENTARY PLEASE TAKE ONE! Innovative Solutions for Using Excess Natural Gas Virus Will Require State to Re-Think Legacy Fund Plans BASIN BITSBASIN BITS Your Gateway to a Career in the Energy Sector Spring 2020 The Official Publication of the Western Dakota Energy Association“Right now, there are a number of new gas plant projects that account for just over a bil- lion cubic feet per day under construction or in the planning phase, and these additional plants will be absolutely necessary for North Dakota to address gas capture and assist the industry in reaching targets set by the Oil and Gas Division of the Industrial Commission. But by the mid-2020s, we expect to be back in an environment where we will need addi- tional investment.” Throughout the last decade, Tulsa-based ONEOK has dedicated itself to building the critical midstream infrastructure required by its customers and has endeavored to do its part in helping reduce flaring in the Bakken in a safe and environmentally responsible manner. ONEOK’s Elk Creek Pipeline was com- pleted late last year and is now providing critical natural gas liquids (NGL) takeaway capacity to the region. As such, NGL vol- ume is now flowing on the fully completed of 13 percent in natural gas production, and a 24 percent increase in the daily volume of gas captured. We may not have hit all of our targets, and there’s still some infrastructure that needs to get built, but last year was a strong year for us. This year, so far, certainly doesn’t look nearly as good.” Even though a number of gas process- ing plants came online last year, which has allowed North Dakota to come closer to its current gas capture goal of 88 percent (91 percent by November 1, 2020), the state still believes natural gas production will reach five billion cubic feet per day sometime within the next decade. This means additional pro- cessing infrastructure and takeaway capacity (to the tune of about $18 billion in invest- ment) will be required before too long. “Even if oil production experiences a slower growth rate into the future, we are expecting a significant growth in natural gas production,” says Justin Kringstad, director at the North Dakota Pipeline Authority. L ast year, North Dakota smashed a new daily oil production rec- ord, with nearly 1.52 million barrels of oil per day produced in November. In addition, nat- ural gas production in the state topped three billion cubic feet per day, which was a first for the state, and North Dakota’s producers went from capturing 81 percent of natural gas volume to 84 percent, further reducing flaring in the state. “Last year, 2019, started out pretty strong, with good oil prices, a lot of investment, and a gas capture policy that allowed more flex- ibility for the industry,” says Lynn Helms, director of the state’s Department of Mineral Resources. “Then, in the second half of the year, oil prices took a step back, as did invest- ment by about 10 percent. But even with that drop, we still saw a five percent increase in oil production over the previous year, an increase By Paul Adair On the Cover Planning for Future Growth in the Bakken Infrastructure Investments: 14 The Official Publication of the Western Dakota Energy Association The 900-mile Elk Creek Pipeline runs through North Dakota, Wyoming and Colorado.and fully contracted growth in the Permian Basin, and factoring in the current com- modity price environment and assumed rig reductions, we expect our 2020 results to be within our previously announced guidance ranges,” says Spencer. “We are working with our producers on any up- dates to their drilling plans and evaluating the impact on our future volume expect- ations, and we will make adjustments to financial guidance, if appropriate.” As part of its reduction in capital ex- penditures, ONEOK has suspended its 200-million cubic feet per day expansion of the Demicks Lake natural gas process- ing facility, its Demicks Lake III project, and any related infrastructure in the Wil- liston Basin, as well as its 100,000 barrel per day additional expansion of the West Texas LPG pipeline in the Permian Basin. In addition, the scope of the Elk Creek Pipeline expansion will also be reduced, with the ability to add future pump sta- tions incrementally to meet its customers’ changing needs. “The planning and work we have al- ready completed will allow us to quickly resume these suspended capital-growth pro- jects when the environment improves and our customers require these services,” says Spencer. “Break-even prices for our well-cap- italized producer customers have improved significantly over the last several years, which gives us the confidence the Williston Basin will remain a competitive producing region through this volatile and uncertain com- modity price environment.” 900-mile pipeline, which extends from the Williston Basin to ONEOK’s existing mid-continent NGL facilities in Bushton, Kansas. This $1.4-billion project has the cap- acity to transport up to 240,000 barrels per day of unfractionated NGLs and has the cap- ability to be expanded to 400,000 barrels per day with additional pump facilities. Eventu- ally, ONEOK expects total Rocky Mountain NGL volume transported on the Elk Creek and Bakken NGL pipelines to reach much more than 240,000 barrels per day. “The completion of Elk Creek provides critical NGL transportation to producers in the highly productive Williston, Powder River, and Denver-Julesburg basins,” says Terry K. Spencer, ONEOK president and CEO. “Elk Creek, combined with ONE- OK’s investments in additional natural gas processing infrastructure in the region, will help producers significantly reduce natural gas flaring in North Dakota.” Looking ahead, however, and consid- ering the impact of the COVID-19 crisis and the ongoing oil standoff between Russia and Saudi Arabia, the road ahead seems very rough—much rougher than it did even a few short months ago. Even the most pessimistic prognosticators would have had a hard time predicting where oil finds itself today. The severe and sudden drop in oil prices has had a chilling effect on the in- dustry, and it would appear as though investors will not be backing substantial growth in the Bakken, at least through the first half of 2020. Should operators look to grow production, they will have to do so through free cash flow, and, with this recent fall in oil prices, that may prove to be exceedingly difficult to accomplish. “We are anticipating a very difficult investment climate for the next while,” says Helms. “There won’t be much outside capital pouring into the exploration and production sector in an effort to grow that industry segment. That said, however, we expect outside capital will continue com- ing into the midstream and gas processing side, but even that will be lessened.” A major investor last year, ONEOK has reduced its growth capital guidance to a range of $1.60 billion to $2.40 billion, with a midpoint of $2.0 billion, a decrease of approximately $500 million from what it had previously planned. The hope is that this new range will offer the company a measure of flexibility in a volatile market to adjust accordingly to volatile producer activity. “Given the significant inventory of flared natural gas in the Williston Basin BASIN BITS | Spring 2020 15 The Elm Creek Pipeline can transport up to 240,000 bpd of unfractionated NGLs. The ONEOK Demicks Lake plant in North Dakota. Photos in this spread provided by Brad Borror, ONEOK.In Calgary, Canada’s oil capital, one company is changing how pipeline data is captured – even here in North Dakota, where nearly 27,000 miles of gathering pipelines operate and traditional inspections are costly. INGU Solutions and their innovative sensors, Pipers®, are creating a safer, more efficient future for pipeline leak detection and prevention. INGU’s founder John van Pol started the company in 2014, after learning of the difficulties operators face while inspecting certain pipelines. He also saw that the cost of shutting down operations to perform inspections was prohibitive. Working to solve these problems, INGU designed the first Pipers® – small enough to fit and collect data in almost any operational pipeline, even those considered unpiggable or inaccessible. As of March 2020, INGU has screened more than 150 pipelines, totalling over 430 miles. The field deployment of the Pipers® is simple. INGU sends Pipers® to the site, and an operator activates them and drops them into an operational pipeline. For up to 24 hours, it will flow freely, collecting data, after which it is retrieved from a designated point. The collected data highlights INGU’s capabilities. Pipers® are 2.2 inches in diameter and are able to withstand pressures up to 1,450 psi, and operate between -4 and 140 °F. Pipers® contain multiple sensors, including a pressure sensor to identify blockages, an acoustic sensor to detect leaks, and a magnetometer to assess the wall condition. Once retrieved, the Pipers® are sent back to INGU where the data is extracted and analyzed, and the results are provided to the operators, who only pay for the information they need. This allows for informed decisions and deeper insights about their pipelines, with zero downtime – resulting in a more efficient inspection with better leak prevention and detection. INGU’s success also comes from recognition by some of the industry’s biggest players. INGU was one of the first companies selected by Chevron Technology Ventures’ Catalyst Program in 2017. Another boost to INGU’s reputation came in May of 2018, as the company was selected by iPIPE (Intelligent Pipeline Integrity Program) to verify its leak detection and prevention capabilities throughout the pipelines of North Dakota. iPIPE is a consortium of industry leaders, focusing on the development of emergent technologies to help avoid leaks in real-world settings. The representatives saw the potential of the Pipers® in one of the most difficult aspects of the entire industry, and the field tests confirmed the leak prevention capability of the Pipers®. “North Dakota is a state with a lot of gathering pipelines. That’s really our sweet spot in the market,” John told host Russel Treat on a recent episode of The Pipeliners Podcast. “When the first iPIPE pitch session came, we took the opportunity and pitched our project, and fortunately we got selected as one of the first companies to participate in the iPIPE program.” But iPIPE was just the beginning. Other global programs are now taking notice, such as Forbes, who selected INGU as one of 19 (out of 3,000 competitors) “Innovative Tech Startups to Watch”. INGU received a top ten placement at the Most Promising Companies at the 2019 Rice Alliance Startup Roundup in Houston. And in November, INGU received growth capital from Energy Innovation Capital and Chevron Technology Ventures, allowing it to scale its operations. Pipers® are used in oil and gas fields all around the world. With their proven ability to detect leaks, improve pipeline safety, and save operators time and money, the INGU difference is a welcome addition to the industry. THE INGU ADVANTAGE ADVERTORIALBASIN BITS | Spring 2020 19 He notes that one Bakken oil producer, Enerplus Resources, is assisting with the re- search project by providing samples of the hydrogen sulfide scavenger used in sulfur treatment equipment the company recently installed at its well sites. According to Helms, if the group is able to produce a safe and effective soil enhance- ment product from hydrogen sulfide, it could not only help solve North Dakota’s sour gas problem; it could also provide a new fertilizer source for the state’s farmers. “I’m told our soils in North Dakota have a high pH, and they are very low in sulfur, so this looks like it could be a good fit,” he says. NEW CYROGENIC CAPACITY Another positive development for North Dakota’s oil and gas industry, says Helms, is the move by XTO Energy, Inc. and Outrigger Energy II to expand the natural gas gathering and processing system in the Williston Basin. An agreement between the two compan- ies announced in January will see Outrigger build a 70-mile-long natural gas pipeline that will feed a new, 250-million-cubic-feet-per- day cryogenic processing plant to be con- structed near Williston. There are also plans for a plant expansion of an additional 200 million cubic feet per day. Outrigger CEO Dave Keanini said in a company statement that the new plant and pipeline will provide other Williston Basin operators access to much needed gathering and cryogenic processing capacity. “Moreover, this additional midstream capacity for gas production north of the Mis- souri River allows the State of North Dakota to make strides toward its goal of minimizing gas flaring in the Basin,” he said. percent in the core area of the Bakken, but he believes that number could rise as high as 35 percent if the technology could be proven successful and be widely adopted by the oil industry. Helms maintains the foam and gas meth- od could also result in a dramatic reduction in flaring, since the technology would store produced natural gas underground, while the infrastructure for transporting it to proces- sors is constructed. “It has the potential to provide tempor- ary storage, which relieves the pressure on gas capture and flaring,” he says. “The technology is very scalable,” Helms adds. “If it’s successful, it could be applied to hundreds or thousands of spacing units in the Bakken formation [and] that could re- duce flaring to almost zero. We would move toward lower carbon oil production, and that’s certainly a worthy goal,” he says. DEALING WITH SOUR GAS Helms notes there’s also work under- way aimed at addressing another concern in North Dakota’s oilfields. It has to do with a contaminant in some natural gas called hydrogen sulfide, also known as sour gas. Hydrogen sulfide, which is toxic when inhaled, is normally handled at a processing plant after it has been extracted at a well site. However, if there’s too high a concentration of it in the natural gas, the gas can be rejected by the processing companies because the new gas gathering and processing infrastructure has been built for sweet natural gas. Helms says a group of agricultural input suppliers is currently studying the viability of transforming the hydrogen sulfide scavenger into a soil enhancement product. L ast summer, the daily volume of gas flared hit an all-time-high in North Dakota’s oil patch. Industry professionals are inter- ested in researching ways to ex- tract more oil in the Bakken while, hopefully, curbing flaring over the long-term. A two-year pilot project that received an $8 million grant from the U.S. Department of Energy and was approved by the North Dakota Industrial Commission in November was underway. The project, which has since been put on hold indefinitely as a result of the evolving COVID-19 pandemic, was going to focus on a new, enhanced oil recovery process that would use a proprietary foam and nat- ural gas mixture to be injected underground. The team had hoped the pilot project would offer a sustainable, game-changing technology that could have been used across the Bakken and in other unconventional plays. Carbon dioxide is already being used for enhanced oil recovery in the Bakken, ac- cording to the North Dakota Department of Mineral Resources. This pilot project that is no longer taking flight had hoped to mark the first time natural gas and foam would have been used in the Bakken to help un- lock the potential of enhanced oil recovery innovation. Currently, most crude oil is left behind in the hydraulically fractured rock produced by fracking. The foam and gas method would increase the pressure in the subsurface, enabling the injected natural gas to enter very tight spaces within the rock, pushing out oil that wasn’t extracted initially. North Dakota Department of Mineral Resources Director Lynn Helms believes the foam and gas method could lead to more oil being squeezed out of existing wells. He points out that similar projects in Texas have shown a 30 to 70 percent increase in oil recovery. If proven successful one day, Helms feels this technology could lead to a significant increase in the state’s oil production. The current oil recovery rate, he says, is about 20 Feature By Mark Halsall Tech Talk: Seeking Innovative Solutions for Using Excess Natural Gas “ “The technology is very scalable. If it’s successful, it could be applied to hundreds or thousands of spacing units in the Bakken formation [and] that could reduce flaring to almost zero.”Next >