North Dakota Pipeline Authority director speaks with Basin Electric directors

Basin Electric’s directors invited Justin Kringstad, North Dakota Pipeline Authority director, to the October board meeting to discuss current trends in oil and gas production in North Dakota and along the Northern Border Pipeline.

Kringstad talked about how the COVID-19 global pandemic affected North Dakota’s oil industry. He also addressed a potential new Federal Energy Regulatory Commission (FERC) tariff on natural gas that is delivered via the Northern Border Pipeline. The tariff would impact natural gas that has a higher BTU (British thermal unit) value than what is permitted by downstream pipelines.

North Dakota’s natural gas is generally higher in BTUs due to the ethane in it. Until now, the gas has blended with Canada’s lower BTU gas in the pipeline and brought the total BTUs down, but Kringstad said higher volumes out of North Dakota are offsetting the Canadian gas.

He said Northern Border’s primary concern is downstream markets and the long-term ability to market North Dakota natural gas to them. “As Northern Border leaves North Dakota, there are roughly seven different interconnecting pipelines that serve the midcontinent portion of the United States; four of those pipelines have a limit of 1,100 BTUs. They have in their tariff structure that they have the right to refuse  gas hotter than 1,100 BTUs,” Kringstad said. “Typically, North Dakota’s gas plants on average are around 1,150 to 1,180 BTUs, so they’re above that threshold. The concern for Northern Border is limiting markets. By implementing this tariff, it would be consistent with some of their downstream customers.”

Kringstad said for interconnecting pipelines, variability is the limiter. “So if you have 1,050 BTU gas from one system one day and then shift over to 1,150 BTU gas the next day, it’s not a consistently marketable product,” he said. “In Bismarck-Mandan, (North Dakota) we consistently get that richer, hotter gas, so it’s not an issue.” If FERC moves forward with an 1,100 BTU limit on natural gas, Kringstad said North Dakota’s gas processing facilities will need to find ways to meet that regulation.

Basin Electric has submitted comments in support of the revised FERC tariff because higher BTU gas can be problematic for the cooperative’s natural gas peaking plants. “Our support is mainly due to protecting the natural gas generation units,” said Daniel Schaaf Gallagher, Basin Electric manager of commodity sales and trading. “The gas generators that are served by Northern Border are tuned to operate using fuel supplies that meet certain gas quality specifications. The proposed tariff revisions would provide Northern Border with tools to manage the BTU content of gas supplies to achieve these gas quality specifications.”

The North Dakota oil industry took a downturn at the beginning of the COVID-19 pandemic, but Kringstad said production now is closer to what it was before March. Many of the thousands of wells that were shut in have been brought back into production. “In North Dakota, natural gas is produced along with crude oil, so you can’t produce one without the other. As wells were shut in and production has dropped, that impacted equally crude oil and natural gas,” he said.