Pipeline companies buy land for multi-billion pipeline projects to carry Bakken crude

WILLISTON -- A multitude of rigs may be stacked in the weeds right now, but pipeline companies are still laying big bets on a big oil future in the Bakken. Two of those multi-billion bets were recently laid in southwestern Williams County.

WILLISTON -- A multitude of rigs may be stacked in the weeds right now, but pipeline companies are still laying big bets on a big oil future in the Bakken. Two of those multi-billion bets were recently laid in southwestern Williams County.

Lunnen Real Estate Services has recently closed two multimillion dollar real estate deals, one for TransCanada’s Upland Pipeline project and the other for Energy Transfer Partner’s Dakota Access pipeline.

“There may be a slowdown in oil drilling, but these companies are preparing for the future,” said Jeff Lunnen, with the company. “These are significant investments in infrastructure for infrastructure to get future oil out of this area. These are the backbones of getting this stuff to market.”

The two deals were separate, although located in the same vicinity in the 1804 Industrial Park on the west side of Williston. Lunnen said he had been in the process of subdividing the property for an industrial park when he was approached by the companies.

“We never got as far as doing a full subdivision,” Lunnen said. “We ended up selling them a 30 and a 50-acre parcel respectively.”


Dakota Access will be using their property for pump houses. “That Trenton area just outside Williston along 1804 was one of the last pump stations or terminal locations they needed to put together, so for them it was a very important property,” Lunnen said. “Transcanada is doing something very similar with the Upland Pipeline. We are one small part of the whole deal.”

2020 completion date

Both of these billion-dollar pipeline projects will be able to carry large amounts of crude oil, although they head in nearly opposite directions.

Upland Pipeline’s 240-mile, 20-inch pipeline will start 15 miles southwest of Williston and head to Canada with its 300,000 barrels of Bakken crude. The proposal has it crossing the Canadian border near Flaxton. The plan is for the pipeline to be in service by 2020.

The company has been completing environmental studies and route refinements since filing with the United States’ Department of State in April, which is now identifying a third party to review the application.

North of the border, the pipeline’s project scope is being finalized in preparation to file with Canada’s National Energy Board.

Their Trenton location is to serve as a commercial anchor point for proposed receipt facilities.


“This option is a normal project play to mitigate potential development in the future,” Matt John, a company spokesman said. “As you are aware, it can take some time to get all approvals in place.”

Dakota Access

Dakota Access, meanwhile, has recently won regulatory approval in South Dakota for its 1,168 mile, 30-inch pipeline that would transport about 450,000 barrels of oil per day from the Bakken to Patoka, Ill., crossing four states to do so.  The North Dakota portion is 345 miles - an estimated $1.4 billion piece - and about 70 of those miles are in Williams County.

The general contractor has agreed to source up to 50 percent of workforce from local union halls, an estimated 4,000 local jobs for 2016, if they gain regulatory approvals in time. The hope is to finish the $3.7 billion project by the end of 2016.

Vicki Granado, a company spokeswoman, said construction won’t begin until all regulatory permits from all four states are in hand, but the company has already begun stacking pipeline in North Dakota. They also awarded a construction contract to Matrix Service company for gathering terminals in Stanley, Ramberg, Epping, Trenton, Watford City and Johnson Corner. The cumulative value of the terminals is $330 million, and each terminal has a working capacity from 200,000 to 600,000 barrels. A Matrix spokeswoman said engineering has begun  on the terminals.

Granado said the advance preparations ensure the company is staged and ready to go as soon as approvals are in hand. “It’s just one of those parts of the business we need to do the preparations during the same time we are getting the approvals,” she said.

An eventual recovery is expected in the industry, Grenado said.


“We don’t have a crystal ball,” she said. “But those within the industry understand this is a cyclical business. So at some point everyone fully expects the price of oil to fully recover. This certainly has happened in years past. We are preparing to hopefully have a pipeline for the long-term to carry us out of the Bakken.”

The pipeline brings Bakken light sweet crude to three major refining markets in a more direct, cost-effective manner, Granado said. It opens up the Midwest and East Coast markets, as well as Gulf Coast markets.

Slowdown offers

Lunnen started work on the 1804 Industrial Park about 1.5 years ago. At the time, he was taking hundreds of phone calls every month.

“I had to talk to 100 or 200 people and go through multiple conversations to find just one to get behind,” he said. “The volume of calls now has slowed significantly, but the people calling me are not just tire kickers. They are in business here and ready to buy to get business done.”

Lunnen believes the downturn is a good time to buy, for those who can take advantage of it.

“We have some good opportunities to plan for the future for those who can afford to buy in,” he said.

His company, meanwhile, is finding opportunities to branch out.

“We are here for the long run,” he said. “We understand there is going to be, since it’s a community tied to oil, periods of slowdown, but that gives us good opportunities to position for the future.”

One of those ways has included branching out into real estate brokerage. “That makes sense for us,” Lunnen said. “We have 60 years of experience in that direction, so we can shift to other people who may have issues leasing or selling.”

Lunnen said he believes things will begin to pick up the second half of 2016.

“We don’t see it as a bust,” he said. “We see it as a market has slowed down a bit to more of a normal pace and it will be like that for a while. You just have to be nimble in the Bakken, since we are slowing down.”

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