Oasis completes new gas processing plant in northwest ND
BISMARCK — Oasis Midstream Partners will celebrate Friday, Oct. 12, the completion of a natural gas processing plant, a highly anticipated project as North Dakota's oil industry works to reduce natural gas flaring.
The Oasis Wild Basin II plant will add 200 million cubic feet per day of natural gas processing capacity, the first major plant completed in several years in the Bakken.
Oasis CEO Taylor Reid said Thursday the plant near Watford City is mechanically complete and will begin processing gas in November.
Oasis began operating the first Wild Basin plant in 2016 to process 80 million cubic feet per day.
"We figured out pretty quickly we were going to fill up that plant pretty fast," Reid said.
As the company made plans for an expansion, Oasis took an incremental step of adding 40 million cubic feet per day of processing capacity to keep pace with growing volumes of natural gas production, Reid said.
North Dakota produced a record 2.4 billion cubic feet per day of natural gas in July, exceeding the amount of processing capacity available in the state.
The new project from Oasis will increase the state's processing capacity by about 10 percent.
Oasis, one of the top oil producers in North Dakota, built the plant to support its own gas production, but also plans to process gas from other companies. Reid projects the new plant will be full in late 2019 or 2020, depending on the level of contracts from others.
"If we're able to sign enough opportunities up, there's a pretty good chance we could fill it up by next year. But that's yet to be seen," Reid said.
When Oasis officials first made the decision to get into the natural gas processing business, they were influenced by the North Dakota Industrial Commission natural gas capture targets, Reid said. Currently, the state requires operators to capture 85 percent of Bakken natural gas or face restrictions on oil production.
"We knew the gas capture laws were just going to get more stringent over time," Reid said. "We knew it was very important to get more control of getting that infrastructure in place."
Oasis captures about 90 percent of its natural gas, exceeding the state's target, Reid said. The company's gas capture rate is expected to increase with the addition of the new plant.
Justin Kringstad, director of the North Dakota Pipeline Authority, projects that the state's natural gas production will exceed 4 billion cubic feet per day. The Oasis project plus several other plants under construction or in development will allow the state to catch up on processing capacity through 2021, Kringstad estimates. But additional plants or expansions will be needed in the future, he said.
The Oasis expansion represents an investment of about $150 million. The entire Wild Basin facility, including gathering pipeline infrastructure in that area and other associated facilities, was a $600 million investment, Reid said.