November 8, 2018 / 5:23 PM / 8 days ago

Energy Transfer aims to expand Bakken oil pipeline capacity to 570,000 bpd

NEW YORK, Nov 8 (Reuters) - Energy Transfer LP said on Thursday it plans to expand capacity on the Dakota Access pipeline system to as much as 570,000 barrels per day (bpd) from about 525,000 bpd currently, as production in North Dakota’s Bakken region surges to a record.

“Recent differentials and continued basin growth highlights the need for additional takeaway capacity out of the basin,” Chief Financial Officer Thomas Long said during the quarterly earnings call.

The company said there were limitations to expanding capacity further to the Gulf Coast on the part of the line that was converted from natural gas service to crude, but said it would evaluate adding pumps to move more oil as production volumes grow.

In October, Energy Transfer launched open season, meaning it started to solicit bids from shippers, looking to expand capacity on the line that runs from North Dakota to Illinois and eventually Nederland, Texas. It is a vital artery that links the Bakken to the Midwest and Gulf Coast refining and export hubs.

Production in the Bakken has surged to a record and is expected to rise further by nearly 13,000 bpd to a peak of 1.35 million bpd in November. Regional oil prices traded WTC-BAK as much as $20 below average front-month benchmark futures last week.

In the Permian, the largest U.S. oilpatch, midstream companies are racing to boost pipeline takeaway capacity as production is expected to climb to new highs above 3.5 million bpd.

Energy Transfer and joint-venture partners have proposed a 600-mile pipeline from the Permian Basin to the Gulf Coast that would add at least 1 million bpd of capacity.

The open season for that line ended this week, and the companies have sufficient commitments to move forward, Energy Transfer said. There is still a supplemental open season planned to accommodate requests from several shippers who have asked for more time to finalize negotiations, Energy Transfer said.

The pipeline is expected to be in service in mid 2020.

The company also said all Permian Express lines - 1, 2 and 3 - are currently operating at full capacity. The final 50,000 bpd of Permian Express 3 capacity went into service in September, bringing the total capacity of Permian Express 3 to 140,000 bpd.

“The industry was kind of caught without enough capacity for producers (in the Permian), so we’re scrambling to help that situation,” said Marshall McCrea, a senior Energy Transfer executive.

“We certainly will continue look to bring on other projects to meet the demands of our customers.” (Reporting by Devika Krishna Kumar in New York, edited by Dave Gregorio)

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