North Dakota's $500 Million Pipeline Funding Paves Way for Industrial Development

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

North Dakota's Industrial Commission has voted unanimously to provide up to $500 million of state funding to support development of WBI Energy's Bakken East Pipeline, which will carry natural gas from the state's western oil fields to the Fargo area in the east.

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Unanimous Approval

Earlier this week, the three-member North Dakota Industrial Commission, chaired by state Governor Kelly Armstrong (R), voted unanimously to provide up to $500 million in funding over a 10-year period to support construction of WBI Energy's Bakken East Pipeline. The pipeline would carry up to 1 billion cubic feet per day of natural gas from the state's western oil fields in the Bakken Shale east to the Fargo area. Industrial Info Resources data finds the total investment value of the approximately 400-mile pipeline approaches $1.4 billion. Subscribers to the Industrial Info Resources Global Market Intelligence (GMI) Oil & Gas Pipelines Project Database can learn more by viewing the related project reports.

More Than Enough?

WBI Energy, a subsidiary of Bismarck-headquartered MDU Resources, may not even need all of the state funding, which would be delivered in $50 million annual installments over 10 years. WBI plans to develop the pipeline in two phases, with expectations to have the entire west-to-east operation in play by 2030, by which time various supply contracts would hopefully have been established to make the gas pipeline an economic win for the company. WBI said it is negotiating some of these supply contracts, and the state in the meantime decided that the funding was necessary to keep the project advancing.

Opening state coffers for the project comes with the expectation that the pipeline will provide upsides for North Dakota, including an additional $170 million per year in oil and gas tax revenues, according to information that Justin Kringstad, executive director of the North Dakota Pipeline Authority, provided news media. He added that additional revenue would be unlocked from facilities such as data centers or power plants that might be built along the pipeline route.

High-Consumption Projects

And what could some of those large-load projects be that are in store for North Dakota, using both natural gas directly or electricity supplied from the fuel? Industrial Info Resources is tracking multiple large-load projects in the state, including $3 billion being invested in data centers that are presently under construction near Bakken East destinations and another $16 billion of other potential North Dakota data projects in the planning or engineering stages.

Construction on one of those data centers is underway just outside of Fargo, the Bakken East's final destination. Applied Digital Corporation broke ground on the first building of its data center complex in Harwood, a few miles northwest of Fargo, last summer. The 900,700-square-foot data hall is expected to use 140 megawatts (MW) of power, which it will receive from the Cass County Electric Cooperative.

But that's not all that Applied Digital has in store for the site. General contractor Century Builders is expected to build an equivalent building requiring another 140 MW that is expected to be completed by 2027. And even more could be in store for the complex, although plans for a third building remain in the very early stages. Industrial Info Resources pegs the investment value of the first two Harwood buildings at more than $3.5 billion. Subscribers to the GMI Industrial Manufacturing Project Database can click here to learn more about the projects.

One potential direct gas-to-power outlet could come from the data center developers themselves. Applied Digital is not only at work on its Harwood complex in North Dakota; last year, the company began operations of a data center in Ellendale, near the South Dakota border and on the receiving end of a planned branch line from the Bakken East Pipeline. Applied Digital's first Ellendale building encompasses about 363,000 square feet and consumes around 100 MW of power in peak periods. But this consumption is expected to begin increasing significantly later this year, when a second building begins operating, followed in turn by another potential expansion.

To fuel this, Applied Digital is considering building its own 300-MW gas-fired power plant that would be supplied by a southern-flowing Bakken East lateral from the Jamestown area to Ellendale that would significantly advance the Applied Digital power project, which is in the very early stages, and further data center expansion.

Other Bakken Developments

North Dakota's Industrial Commission sees the Bakken East Pipeline project as unlocking further oil and gas revenues as well as paving the way for more industry to be located in the state. Applied Digital's data center developments near Fargo and in Ellendale are some of the earliest indications of large-load power consumers moving into areas that would benefit from the pipeline.

The Bakken East aims to move gas out of the Bakken fields to demand markets in order to avoid flaring at the wellhead. The state now flares around 4-5% of the associated gas produced from its oil production, according to various news media outlets. This used to be much higher. The U.S. Energy Information Administration (EIA) reports that 19% of associated gas was flared in the state in 2019, before stricter emissions regulations began taking effect.

TC Energy also has made moves to transport additional Bakken gas to profitable markets with its Bison Xpress project, which was cleared to begin operating earlier this month. Bison Xpress unlocked 300 million cubic feet per day of gas delivery from the Bakken into markets in the eastern Rockies. The project consisted entirely of additions and modifications to North Dakota compression stations.

Key Takeaways

• The North Dakota Industrial Commission unanimously voted to provide $500 million over 10 years to support development of WBI Energy's Bakken East natural gas pipeline.
• The pipeline would carry up to 1 billion cubic feet per day of gas from the Bakken Shale oil fields to markets in the east around Fargo and to the south in Ellendale.
• Industrial Info Resources is tracking $4.2 billion of active Applied Digital data center and power projects that would benefit from the Bakken East Pipeline, as well as several other potential data center and power projects.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).