BISMARCK, N.D. (AP) — Despite millions of dollars in promised subsidies, a unit of North Dakota’s only Fortune 500 company says it won’t pursue plans to build a natural gas pipeline from western North Dakota’s oil patch to the eastern part of the state.
WBI Energy, a subsidiary of Bismarck-based MDU Resources Group, said the project is not viable due to regulatory uncertainty, limited in-state demand and rising construction, labor and land-acquisition costs.
In a letter to North Dakota Pipeline Authority Director Justin Kringstad, the company said materials and construction costs have risen up to 50% in just the past nine months.
“The recent and potential future inflationary pressure presents a significant challenge to a large-scale pipeline project from western to eastern North Dakota,” the company said. “This challenge is further compounded by the fact that the actual construction of a major pipeline project, if it were to proceed, would occur four to five years in the future, following an uncertain siting/regulatory process.”
The North Dakota Legislature in November set aside $150 million in federal coronavirus aid to help construct such a trans-state pipeline for natural gas, which is a byproduct of oil production. The idea, backed by Republican Gov. Doug Burgum, was to help cut down on the wasteful flaring at well sites, and pipe it to communities in the gas-poor eastern part of the state, hoping to spur industrial development.
Applications for the money ended Monday.
Only Viking Gas Transmission, a subsidiary of Tulsa, Oklahoma-based ONEOK, applied for the grants, Kringstad said. The company wants $10 million to build a 12-mile pipeline that would link to its existing pipeline in western Minnesota to provide gas to the Grand Forks area.
Viking said the total cost of its project is $26 million.
WBI Energy has not disclosed its estimate of building a trans-state natural gas pipeline.
Kringstad said the unused grant money likely will “go back to the Legislature for reappropriation.”
Burgum spokesman Mike Nowatzki said the state “will continue working toward solutions to bring natural gas from western to eastern North Dakota.”
WBI Energy owns and operates more than 3,700 miles of transmission and storage pipelines in the Dakotas, Minnesota, Montana and Wyoming. The company said 1,545 miles of its pipelines are in North Dakota.
WBI Energy said the costs of securing pipeline right-of-way are estimated to be 25% higher than its previous pipeline projects “and frequently exceed recent market values for the purchase and sale of land in rural North Dakota.”