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Enbridge, Veresen to build Bakken natural gas pipeline

Pipelines feed crude oil into in the tank farm at the Enbridge Pipelines oil terminal facility in Hardisty, Alta. Enbridge, Inc. ownes 72 per cent of Enbridge Income Fund Holdings, Inc.

Larry MacDougal/The Canadian Press/Larry MacDougal/The Canadian Press

The joint owners of the Alliance Pipeline are planning a new line to move liquids-rich natural gas in North Dakota to a processing plant in Illinois.

Enbridge Inc. and Veresen Inc. said Tuesday they will build a 124-kilometre pipeline from the Hess Tioga field processing plant in the Williston Basin to the Alliance mainline at Sherwood, N.D.

The gas can then move along the Alliance pipeline to the Aux Sable natural gas liquids processing plant in Channahon, Ill., near Chicago. That plant is owned by Enbridge, Veresen and Williams Partners L.P, three of the continent's biggest pipeline operators.

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The Alliance pipeline is one of North America's key energy infrastructure assets – carrying natural gas from northeastern British Columbia and northwestern Alberta through Saskatchewan, North Dakota, Minnesota and Iowa to markets in the Chicago area.

Enbridge and Veresen did not disclose a price tag for the new North Dakota project.

"With the rapid increase in crude oil drilling activity in the Bakken (Formation), there is a corresponding need for additional capacity to gather and process associated liquids-rich natural gas volumes," said Veresen CEO Stephen White.

Natural gas producers in North America have been turning an increasing focus to liquids-rich areas as a means to cope with persistently low prices. The liquids, used to make plastics and petrochemicals, fetch a much higher price than ordinary dry natural gas.

Enbridge's president of gas pipelines, green energy and international said the Bakken area – a petroleum-rich rock formation that stretches through parts of Montana, North Dakota and Saskatchewan – is of strategic importance to the company.

"Our significant investments in crude oil transportation systems in North Dakota and Saskatchewan enable Bakken producers to access multiple markets," Enbridge president Al Monaco said in a statement.

"We're now extending those services to natural gas and (natural gas liquids) midstream infrastructure."

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The Tioga Lateral pipeline is expected to be in service by the third quarter of 2013, provided it gets regulatory and other approvals.

Global energy giant Hess Corp. has agreed to be an anchor shipper on the Tioga line. At the same time, the Aux Sable partners and Hess have reached an agreement concerning natural gas liquids processing services.

Hess has committed to ship enough gas on the Tioga line for it to go ahead. But Enbridge and Veresen will hold an open season to attract more shippers.

The pipeline will have an initial design capacity of about 120 million cubic feet per day. It can be expanded based on shipper demand.

Enbridge shares rose about 2 per cent, or 64 cents, to $33.09 in late-morning trading on the Toronto Stock Exchange. Veresen shares rose 15 cents to $14.81.

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