KM Double H pipeline moves Wyoming oil

Kinder Morgan Inc. has begun receiving Powder River basin crude oil into its Double H pipeline system via a newly constructed connection near Douglas, Wyo., increasing system capacity to about 99,000 b/d.

KM said further expansion is possible as the Bakken shale and Power River basin grow.

The Market Center Gathering system in the Bakken supplies the 485-mile Double H, which runs from the Dore terminal in North Dakota and the Albin terminal in Montana to Guernsey. At Guernsey, KM expects to put delivery connections to Plains All American Pipeline's Guernsey station and Sinclair Guernsey terminal into service later this quarter, increasing connectivity to local and regional markets.

Shippers also have access via an interconnect with the Pony Express Pipeline for transportation to Phillips 66's Ponca City, Okla., refinery or the Deeprock terminal in Cushing, Okla. Double H began service in February.

The Powder River basin project stems from an open season held earlier this year. KM in January acquired Hiland Partners and its Double H pipeline (UOGR March/April 2015, p. 6).

Proposed ND refinery seeks state air-quality permit

A joint venture seeking to build a 40,000-b/d refinery in Berthold, ND, has filed for an air quality construction permit with the North Dakota Health Department's Division of Air Quality (UOGR, July/Aug, 2015, p. 1).

Quantum Energy Inc., Tempe, Ariz., and a joint-venture partner Native Son Holdings LLC (NSH), The Woodlands, Tex., plan to build a grassroots refinery in Ward County, ND. The permit process could take up to 6 months, said executives who filed for the permit in late July.

Construction of the refinery would require a capital commitment of about $645 million, Quantum Energy has said.

Based on a 360-day operating year, the refinery would have a production slate of 18,400 b/d of gasoline, 13,200 b/d of ultralow-sulfur diesel (ULSD) No. 2, 5,600 b/d of ULSD No. 1, and 2,800 b/d of atmospheric gas oil.

Hess Corp. sees growing 2015 Bakken output

Hess Corp. reports its second-quarter Bakken production beat its earlier expectations with net production averaging 119,000 boed.

Consequently, Hess has boosted its 2015 Bakken production forecast. Average Bakken production could reach 110,000 boed, up from its previous forecast of 105,000 boed, the company said.

Hess executives reported second-quarter drilling and completion costs averaged $5.6 million, down 24% from the same period a year ago.

"We are delivering some of the lowest cost and highest productivity wells in the Bakken, which in combination means that we are generating some of the highest returns in the play," said Gregory P. Hill, Hess president and chief operating officer.

"With an 8-rig program at current strip prices and costs, we have about a 10-year inventory of drilling locations that can generate after-tax returns of 15% or higher," Hill said on July 29.

Whiting cuts Bakken rigs for second half

Whiting Petroleum decided to pull three rigs from its earlier announced 11-rig program with six rigs operating in the Bakken and two in the Niobrara. In North Dakota, Whiting is using more sand for completions.

During a July 30 earnings call, Whiting Senior Vice-Pres. Mark Williams said a Skunk Creek well in South Ford field of northeast Dunn County, ND, flowed 4,300 boed IP during a 24-hr test, which Williams called one of the best wells so far for Dunn County.

Williams said he expects the enhanced well completions will show higher estimated ultimate recovery as well although that has yet to be demonstrated.

With enhanced well completions, the cost per well is $7.5 million vs $7 million using less sand. But production rates are at least 40-50% higher, making executive believe the higher well cost will be worth the effort.

North Dakota contemplates radioactivity in oil waste

The North Dakota State Health Council voted unanimously Aug. 11 to adopt rules that would permit waste, including oil field waste, containing radioactivity levels of up to 50 picocuries per gram of technologically enhanced radioactive material to be disposed at approved landfills.

The level is tenfold the level of radioactivity that the state currently allows at about a dozen landfills in North Dakota. The existing 5 picocuries per gram limit was among the lowest in the nation, state officials noted. Texas and Washington set their limits at 10,000 picocuries per gram.

Att. Gen. Wayne Stenehjem and the Legislature's Administrative Rules Committee have yet to approve the rule change. Dave Glatt, North Dakota Health Department's environmental health chief, said the rules possibly could be effective by Jan. 1, 2016.

Unconventional development and production in the Bakken formation means North Dakota has had to deal with more oil waste, including increased problems of illegal oil waste dumping.

Operators of North Dakota's landfills that accept special waste or industrial waste would have to apply for a permit modification to receive waste containing higher radioactivity, said the 11-member council, which is the governing and advisory group for the state Department of Health.