North Dakota Courting Petrochemical Industry For Plastics Plant

The Bismarck Tribune reports that North Dakota is courting the petrochemical industry with a new tax incentive aimed at adding value to the state’s abundant natural gas supply. A bill approved in the recent legislative session adds a sales tax exemption for certain natural gas processing facilities. The goal is to produce a supply of ethane, propane, and other products that could attract a plastics manufacturing plant to North Dakota.

North Dakota produces between 25,000 bbld and 50,000 bbld of ethane at natural gas processing plants in Tioga and near Williston, says Justin Kringstad, director of the North Dakota Pipeline Authority. Ethane is then shipped by pipeline to Alberta, Canada for plastics manufacturing.

The Tribune notes that the state’s Department of Commerce has been working to attract a petrochemical plant to North Dakota to create a new industry and take advantage of growing natural gas volumes, quoting Shawn Kessel, deputy commerce commissioner. The state produced 2.6 Bcfd of natural gas in February, with about 20% flared due to inadequate processing capacity and other infrastructure.

“Some companies are having to reduce the amount of oil that they’re developing so they don’t exceed flaring regulations,” Kessel tells the Tribune. “If we can find a company that can utilize this gas and create a value-added product out of it, we win on multiple levels.” Natural gas that is produced along with Bakken crude oil is rich gas with a high concentration of natural gas liquids.

The sales tax exemption approved by lawmakers seeks to encourage further natural gas processing to produce ethane, propane, butane, and other purity products. The incentive applies to straddle plants, those located on or near natural gas transmission lines. The tax exemption also applies to deep-cut fractionators. To qualify, facilties must produce at least 45,000 bbld of ethane. North Dakota already has a sales tax exemption for a petro-chemical plant, but it has not been used.

(SOURCE: The Weekly Propane Newsletter, June 3, 2019)