BISMARCK – A company unveiled plans Monday for a $4 billion manufacturing plant in North Dakota that will convert a byproduct of natural gas processing into an ingredient for plastic products, representing what Gov. Jack Dalrymple called the largest private investment in state history.

Badlands NGL’s LLC and two partners are developing the factory, which will turn ethane gas into polyethylene for use in a wide variety of plastic products, from food packaging to pipelines.

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Company CEO Bill Gilliam said the partners hope to start cranking out the finished product – small white plastic beads – by the end of 2017.

The plant will employ about 500 people and produce 3.3 billion pounds of polyethylene annually, or 1.5 million metric tons, he said. Global polyethylene production is about 80 million metric tons per year.

Gilliam said more than two sites are being considered in North Dakota but he wouldn’t say where, except that they aren’t in active oil drilling locations in western North Dakota.

The plant is expected to cost $4 billion to $4.2 billion and will require a “substantial footprint” of more than 1,000 acres, he said.

“We think that building a facility like this in the actual Williston Basin is probably not a good idea. Obvious there’s a lot of business going on there, a lot of activity,” he said.

Having access to every possible ethane producer will be the biggest factor in determining site location, Gilliam said, adding rail access and infrastructure also are factors.

“So we’ve worked with several folks on the ethane gathering pipeline system, and places outside of the Williston Basin both to the south and east are being evaluated,” he said.

A final site selection is expected later this year as part of a preliminary engineering study being conducted by project partner Tecnicas Reunidas, a major contractor for petrochemical plants based in Madrid, Spain.

Dalrymple said the project is “fully aligned” with the state’s goals of reducing natural gas flaring, adding value to energy resources and creating diverse job opportunities.

“I think it is a very exciting announcement and one that will surely go down in history,” he said, calling it “a record investment in our energy industry.”

The project partners chose North Dakota because of its abundant ethane supply and because exporting polyethylene to end users in the United States is faster and cheaper from North Dakota than from the Gulf Coast, where most polyethylene factories are located, Gilliam said.

He said North Dakota produces about 200,000 barrels of ethane per day, but the vast majority is sold as pipeline gas and none of it is being made into value-added products – at least not within the state. North Dakota ethane produced at Hess Corp.’s natural gas processing plant near Tioga is being shipped via pipeline to Nova Chemicals Corp.’s polyethylene factory in Alberta, Canada.

The project announced Monday isn’t the only multibillion-dollar venture planned in North Dakota that would make use of the state’s abundant natural gas resource.

Minnesota-based CHS announced last month it was moving forward with construction of a $3 billion facility at Spiritwood that will convert natural gas into nitrogen fertilizer. Northern Plains Nitrogen also is proposing a $1.85 billion, 340-acre fertilizer plant on the north edge of Grand Forks.

Badlands NGL’s is a Delaware corporation with offices in California and New York and is in the process of moving to new headquarters in Denver, Gilliam said. The project’s other partner, Vinmar Projects of Houston, Texas, has signed a 15-year agreement to purchase and market all of the polyethylene produced at the facility, he said.

Gilliam said the project partners don’t foresee any problems in obtaining the remaining financing they need.

“Not only have we started with having a large number of very, very well-respected folks here in North Dakota as shareholders, but the financial markets have given us and (Tecnicas Reunidas) and Vinmar assurance that the entirety of the $4 billion will be available to us as we go forward with a very, very aggressive construction schedule,” he said.

The company that will do the actual manufacturing and marketing will be a publicly-traded master limited partnership headquartered in Bismarck, he said.

Reach Nowatzki at (701) 255-5607 or by email at