North Dakota’s Industrial Commission is at the center of a pivotal decision concerning a substantial financial guarantee aimed at revolutionizing the state’s natural gas infrastructure. This significant move involves a proposed decade-long line of credit, committing a staggering $500 million to secure critical pipeline space. The initiative is designed to transport natural gas from the resource-rich Bakken oil fields to the central and eastern regions of North Dakota, primarily to meet escalating industrial demands, including those from burgeoning data centers.
The financial commitment from the state would involve purchasing $50 million worth of pipeline capacity annually over a ten-year period. This unprecedented backing underscores the state’s determination to address a long-standing challenge within its energy sector: the capture and efficient utilization of natural gas, which is often wastefully flared as a byproduct of oil production in the Bakken.
The problem of natural gas flaring has persisted, with the volume of gas relative to oil extraction continuously increasing, making its capture a complex challenge. A new pipeline network is seen as a crucial solution, not only for environmental reasons but also for creating new, stable markets for the state’s prolific oil industry. This strategic investment aims to transform an environmental liability into an economic asset.
Two prominent energy entities, WBI Energy—a subsidiary of Bismarck-based MDU Resources Group—and Intensity Infrastructure Partners, have formally presented their respective pipeline proposals. While WBI Energy boasts a strong in-state presence and existing infrastructure, Intensity Infrastructure brings considerable experience, backed by key figures like Harold Hamm, known for pioneering horizontal drilling in the Bakken.
The state’s role as a shipper under this guarantee is designed to circumvent typical bottlenecks in pipeline development. By owning the shipping space, North Dakota plans to then lease it to private companies for shorter intervals, providing flexibility and reducing risk for potential users. Officials from both WBI Energy and Intensity Infrastructure expressed optimism that private demand for the gas would be robust enough to minimize the state’s actual financial outlay, potentially negating the need for the full guarantee to be utilized.
The journey to this point has been a legislative one, with the state Legislature initially approving $300 million for a similar guarantee in 2023. This sum was later expanded by an additional $200 million, making the total commitment $500 million. The provision was a subject of considerable debate during the recent legislative session, highlighting the political complexities inherent in such large-scale infrastructure projects. Prior attempts to incentivize pipeline development, such as a $150 million grant from COVID-19 relief funds in 2021, did not attract any takers, underscoring the need for the current, more substantial guarantee.
Both proposed projects envision two construction phases, with the central North Dakota segment aiming for completion by 2029 and the eastern portion by 2030. A significant driver for this pipeline is the burgeoning demand from data centers, with projections indicating the pipeline could serve up to 8,000 megawatts of data center energy needs. This includes a potential 80-mile extension to Ellendale, where Applied Digital, a data center client of MDU’s electric business, seeks to expand its footprint significantly.
Support for WBI Energy’s project has been robust, drawing letters of endorsement from numerous electric and gas utilities, economic development associations, and institutions like North Dakota State University. Intensity Infrastructure, while newer to the North Dakota utility scene, has strong backing from major energy companies operating in the state, including Continental Resources. Interestingly, Intensity’s executives emphasized their historical practice of not relying on eminent domain, a potentially controversial aspect of large infrastructure development.
Despite Intensity’s stance, the topic of eminent domain did surface during discussions, with two of the three Industrial Commission members expressing some sympathy for its potential necessity for the gas line. Commissioner Armstrong articulated a broader perspective, stating, “I don’t care if it’s a highway, bridge, transmission line or pipeline. We are the geographic center of North America and we produce a whole of things we cannot consume here. If we cannot get our products to market, we do not have an economy,” highlighting the critical importance of such infrastructure for the state’s economic vitality.
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