The Enid News and Eagle, Enid, OK

April 4, 2013

Hiland eyes pipeline for Bakken oil

Staff and wire reports
Enid News & Eagle

ENID, Okla. — Enid-based Hiland Partners has proposed building a nearly 500-mile pipeline that would feed oil from North Dakota’s booming Bakken oil field into another pipeline in eastern Wyoming.

The 12-inch pipeline would cost $300 million. Initial capacity would be 50,000 barrels a day, but the pipe could handle up to twice that. Oil would begin flowing in August 2014.

The pipeline is proposed by Hiland Crude, a subsidiary of Hiland Partners. Hiland Crude Vice President Jim Suttle discussed the pipeline Wednesday with Converse County (Wyo.) commissioners in Douglas, according to the Casper (Wyo.) Star-Tribune.

Hiland announced plans last fall to build the crude oil pipeline from Dore, N.D., to Guernsey, Wyo. There, it will connect with the Pony Express pipeline, a former natural gas pipeline being converted to crude oil service by Tallgrass Energy Partners. That line eventually will be extended to Cushing.

“That’s a new line of business, long-haul interstate crude oil transportation, that we’re getting into,” said Derek Gipson, Hiland Partners executive vice president and chief financial officer. “We expect that line to start moving barrels in late 2014. Construction will kick off in the back half of this year. That’s a key project for us to execute on.”

Suttle told Converse County commissioners Bakken oil would fetch a better price in Cushing.

“Forever, the Rocky Mountain crude oil market has kind of had a dead end in Guernsey, often trading $26 or more below what price of crude would be in Cushing,” he said. “It’s never been really feasible to do anything about that.”

But thanks to the recent boom in North Dakota, companies have been looking to transport more product south. Hiland’s pipeline, deemed the Double H, could capitalize on some of that demand.

Suttle told commissioners his company is negotiating with landowners along the route, having signed deals with about 15 percent of all parties along the line in Converse County. He said after his presentation, negotiations elsewhere along the line have been more productive, but declined to estimate what portion of parties had signed land use deals.

Construction on the line is expected to begin late this summer, with most sections taking four or five months to build. Suttle said the project will create about 180 construction jobs at any given time, with between three and five permanent positions likely. Suttle said his company likely will contract with Wyoming-based inspectors during pipe operation.

Converse County commissioners encouraged the company to tread lightly when dealing with county landowners. Some have heard from constituents unhappy about the possibility of a new line.

“We understand the value of interstate pipelines,” Commissioner Jim Willox said. “Most people don’t like them, but do tolerate them.”

The commission didn’t take any formal action regarding the project.

Senior Writer Jeff Mullin and The Associated Press contributed to this story.