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Plant will use Ethane from Natural Gas to Make Consumer and Industrial Plastics

The cutback on flaring the Bakken’s natural gas took another positive step yesterday. A planned plastics manufacturing facility, announced at a press conference in Bismarck, will produce 1.5 million metric tons of polyethylene (3.3 billion pounds annually) from ethane produced in North Dakota. The plant will employ 500 people.

Speaking at the Oct. 13 press conference, North Dakota Agriculture Commissioner Doug Goehring said, “When completed, this project by itself has the potential to reduce most of the flaring of natural gas in our state.”

Bakken Formation MapThe project promoter, Badlands NGL, LLC, said it will take at least three years for full development and will require an investment of $4 billion. The facility will convert ethane gas to both low and high density plastics. Badlands intends to market the majority of the polyethylene products domestically, with additional sales to Asia, South America and Europe, according to a press release.  Project developers say that the plant’s location in North Dakota enables efficient shipping to world markets from ports in the Pacific Northwest and the Atlantic.

Badlands is working with two strategic partners; Madrid-based Tecnicas Reunidas and Vinmar Projects of Houston, Texas. Tecnicas Reunidas, a petrochemicals and polymers contractor, is completing a preliminary engineering analysis for Badlands. This work is scheduled for completion in 2014 and will include technology evaluations, engineering and planning, and final site selection.

Vinmar and Badlands have signed a mutually binding, 15-year memorandum of understanding for 100% of the polyethylene to be produced by the Badlands project.

Badlands CEO Bill Gilliam said North Dakota produces about 200,000 barrels of ethane per day, but the vast majority is sold as pipeline gas. 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, according to a report in the Grand Forks Herald.  The company in charge of manufacturing and marketing will be a publicly-traded master limited partnership headquartered in Bismarck, the report said.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.