Bakken and Ozark: Investing in stability and flexibility
“This system is planned to provide cost-effective access to Bakken crude oil production for the Midwest and Gulf Coast, which will increase MPC’s refinery supply flexibility.”
Two recent investments by MPLX are intended to help provide the stable, flexible supply of crude oil MPC and other refiners rely on to manufacture the products that millions of people use every day. The Bakken Pipeline system will bring crude oil from the prolific Bakken Shale in North Dakota to Patoka, Illinois, and to the U.S. Gulf Coast. Ozark Pipeline moves crude oil from the storage hub of Cushing, Oklahoma, to Wood River, Illinois.
Wood River and Patoka are important locations for the pipelines because they link to the Midwest refining system – including MPC’s four Midwestern refineries – and beyond, through MPLX’s barge dock, tank farm and pipelines at Wood River, and a tank farm and pipelines at Patoka.
Bakken and controversy
The Bakken Pipeline system consists of the Dakota Access Pipeline, which runs from North Dakota to Patoka, and the Energy Transfer Crude Oil Pipeline, which runs from Patoka to the Gulf Coast. The system has a capacity of about 470,000 bpd of crude oil. MPLX’s approximate $500 million investment in the Bakken system, through subsidiaries, amounts to about a 9 percent indirect equity interest.
“This system is planned to provide cost-effective access to Bakken crude oil production for the Midwest and Gulf Coast, which will increase MPC’s refinery supply flexibility,” said Chairman, President and CEO Gary R. Heminger.
In addition, the Dakota Access Pipeline portion of the system created controversy. Before MPLX had made its investment in the project, anti-pipeline activists protested the pipeline, saying it endangers the Standing Rock Sioux tribe’s water supply by running under a lake they consider sacred. They also claimed the pipeline route disturbed their tribe’s burial grounds, and that Native American tribes were not meaningfully consulted on the route.
In fact, when routing the Dakota Access Pipeline, the U.S. Army Corps of Engineers held 389 meetings with 55 native American tribes. The Standing Rock Sioux were contacted by the Corps multiple times to discuss archaeological and other surveys. The pipeline is not built on Native American reservations, and the chief archaeologist of the North Dakota State Historical Society confirmed that no burial grounds had been disturbed.
As the pipeline traverses Lake Oahe, it will be a minimum of 95 feet below the lake bed – much deeper than other pipelines that already cross the lake along the same path.
MPC is not going to be involved in any project, ever, that violates burial grounds or knowingly endangers waterways, said Heminger. “We have no interest in violating either of those concerns.”
On Feb. 15, after the Army Corps of Engineers granted a needed easement for the Dakota Access portion of the system to be completed, MPLX closed on its investment in the project.
On March 1, MPLX, through subsidiaries, purchased the Ozark Pipeline for about $220 million. From the huge Cushing crude oil storage hub, the Ozark Pipeline moves about 230,000 bpd to Wood River.
And it’s about to get bigger. Enbridge, the former owner of Ozark, held an open season to determine if there was enough committed interest from shippers to expand the pipeline’s capacity. As a result of the open season, which was held before MPLX purchased Ozark, MPLX will expand its capacity to about 345,000 bpd by increasing the power at pump stations and adding drag-reducing agents to the crude oil. The expansion is expected to be complete in the second quarter of next year.