2018 ANNUAL REPORT

www.energynd.com 1 table of CONTENTS LETTER FROM THE DIRECTOR...... 3 ENERGY SITES OF NORTH DAKOTA...... 4 A VIEW FROM ABOVE...... 4 NORTH DAKOTA GENERATION...... 5

GENERATION...... 6 Coal-Based...... 6 Mining...... 7 Reclamation...... 8 Peaking Plants...... 9 Wind...... 10 Geothermal...... 14 Hydroelectric...... 14 Solar...... 14 Recovered Energy...... 16 Transmission and Distribution...... 17 Modes of High Voltage Electric Transmission...... 18

PETROLEUM...... 19 Oil and Gas Production...... 19 Shale Energy Technology...... 21 Refining...... 22 Pipelines...... 23 Synthetic Natural Gas...... 25 Natural Gas Processing...... 26 Petroleum Marketing / Propane...... 28

BIOFUELS...... 28 Ethanol...... 28 Biomass / Biodiesel...... 30

ENERGY RESEARCH...... 30 ENERGY EFFICIENCY...... 32 NORTH DAKOTA TAXES...... 33 NORTH DAKOTA JOBS...... 33 EDUCATION/WORKFORCE TRAINING...... 34

The Great Plains Energy Corridor, housed at Bismarck State College’s National Energy Center of Excellence, works with partners in government, education, and the private sector to promote and enhance North Dakota’s energy development. Together we provide information, education, outreach programs and special events on a wide range of energy topics. www.energyND.com

2 Spotlight on North Dakota Energy from the DIRECTOR Thank you for picking up the Power Cooperative’s Milton 2018 edition of the Great Plains R Young Station near Center. Energy Corridor’s Spotlight on The goal of Project Tundra is to North Dakota Energy! This report remove 90 percent of carbon- is a statistical overview of all dioxide emissions from one of the forms of energy in North Dakota plant’s two units. for the year 2018. It’s updated annually and usually distributed } Basin Electric Power at the end of the first quarter of Cooperative, a Bismarck, N.D.- the following year. based electric utility, has opened an Integrated Test Center at its Here’s a quick look at some of Dry Fork Station near Gillette, the highlights from 2018: Wyo. Dry Fork is a coal-based power plant with a design } The development of wind capacity of 422 megawatts. The projects in North Dakota ITC is a research test facility continues. The state has some providing space for researchers of the best wind resources to test carbon capture, utilization in the nation. Over the past and sequestration technologies 15 years, more than 3,000 using 20 megawatts of flue gas megawatts of wind generation from the plant. Researchers from have been installed. Federal around the world will be using our industry partners and tax credits continue to be an the facility. additional factor for wind energy the EmPower North Dakota development in North Dakota. } It’s anticipated that North Commission, we are able to Dakota’s natural gas production provide up-to-date information } In February 2018, the U.S. will exceed 4 billion cubic feet for this year’s report. Department of Energy awarded per day. The development Thank you for your continued $6 million, and in June 2018, and expansion of natural gas readership! the North Dakota Industrial processing plants will allow North Commission (through the Lignite Dakota to catch up on processing Research Program) awarded capacity through 2021, but $15 million to advance Project additional plants or expansions Tundra. Project Tundra is a will be needed in the future. research project designed to R e th a M a tte r n capture carbon dioxide from an I would like to thank Daryl Hill, Retha Mattern, Director existing North Dakota coal-based who assisted with gathering Great Plains Energy Corridor power plant. Project Tundra is the information you find in Bismarck State College being developed at Minnkota this document. Together, with

North Dakota is one of the only states with a multi-resource energy policy, guided by the EmPower North Dakota Commission. Through the EmPower North Dakota Commission, leaders from all major energy industries in North Dakota meet with one common goal: to be critical thinkers for the development of the state’s energy resources. www.EmPowerND.com

www.energynd.com 3 energy sites of NORTH DAKOTA

Minot Williston

Grand Forks

Dickinson

Bismarck Fargo

Natural Gas Processing Coal-Based Generation Lignite Mine Hydro Power

Wind Farm Synfuels Plant Ethanol Plant Petroleum Refinery

Recovered Energy Solar Farm Biodiesel Plant Peaking Station Generation

Bakken Formation Oil Fields

+ Map courtesy of Bismarck State College National Energy Center of Excellence.

A View From Above North Dakota Total Energy Production According to the U.S. Energy Information Administration, North CrudeCrude Oil Oil Dakota ranks sixth in the nation NaturalNatural Gas Gas for total energy production – a CoalCoal total of 3,498 trillion BTU. The RenewablesRenewables state ranks fourth in the country for total energy consumption per capita at 776 million BTU. Source: U.S. Energy Information Administration, State Profile and Energy Estimates

4 Spotlight on North Dakota Energy north dakota GENERATION } North Dakota produces North Dakota Electricity Production electricity from a wide variety of sources, including coal-fired baseload power plants, the hydroelectric turbines at Garrison Coal-Fired Dam, a growing statewide Wind network of wind energy turbines, Hydro natural gas and fuel oil peaking Natural Gas-Fired plants, heat recovery units that Other capture waste heat from pipeline compressor stations, and even Sources: U.S. Energy Information a small amount of solar power. Administration, North Dakota State There is also work being done Energy Profile to explore the potential of Coal-Fired geothermal generation in western (North Dakota does not have any or “hard wired” to a power plant North Dakota. Wind nuclear powerHydro plants). Peaking someplace through the electric } Electricity is very unique. It stations areNatural usually Gas-Fired fired with grid. That plant may be around natural gas. These are designed the corner, down the block or is an “instant-use product,” Other which means that the moment to start operating if the demand several hundred miles away. it is produced (generated), it’s for electricity outstrips the capacity } All the plants are being used. It is not stored (on of the baseload plants, and can interconnected, so if one source a regional or commercial basis) be started on a moment’s notice, isn’t able to produce electricity, or warehoused for use at a later while coal based plants require the other sources can “cover” for time. Electricity that we use in our several hours from start to full the source that isn’t able to. homes, businesses and schools load. Coal-based and nuclear plants operate most efficiently is generated as needed and } The fact of the matter is, at full load and are usually the when needed. The demand for electricity must be produced “backbone” of a generating mix. electricity varies considerably instantly, 24 hours a day, 7 days a An intermediate plant can be used during the day, during the week, 365 days a year. It must be as a peaking station or baseload. different seasons, etc. Regardless, produced even when temperatures These plants are usually fueled a power plant has to be operating range from way below zero to with natural gas. There aren’t to produce the electricity needed. above 100 degrees. any intermediate plants in North } There are many different ways Dakota. Intermittent plants are } According to the U.S. Energy to produce electricity such as: typically comprised of renewable Information Administration, North § Coal-based power plants energy sources such as wind Dakota had the fifth lowest-cost or solar, and operate when the § Nuclear plants electricity for residential use. The resource is available and can average residential electricity § Wind farms supplement the other sources. price in November 2018 in § North Dakota was 9.89 cents/ Natural gas plants } The most common sources in kWh, compared to the national § Solar farms North Dakota are coal-based average of 12.95 cents/kWh. § Geothermal and natural-gas fueled plants and wind farms. It makes no } Even though demand for § Hydro difference how electricity is electricity rapidly increased in } Power plants can be classified produced, it’s all the same recent years, primarily driven as baseload, peaking, product. It just comes from by the oil and gas production intermediate, and intermittent. different sources. industry in western North Dakota, almost 55 percent of the state’s Baseload plants are designed to } Every establishment that total electricity supply is provided run all the time. These would be uses electricity – and there are to the interstate electricity trade. the coal-based and nuclear plants millions of them – is connected

www.energynd.com 5 GENERATION + The Milton R. Young Station, located near Center, N.D., began generating electricity in 1970. The plant is operated by Minnkota Power Cooperative, with headquarters in Grand Forks, N.D. Photo courtesy of Minnkota Power.

COAL-BASED

} Great River Energy’s Stanton } North Dakota’s power plants } The lignite industry employs Station, near Stanton, N.D., was have invested around $2 billion 3,800 workers directly and shut down in February 2017. in technology to reduce emissions another 10,200 indirect workers. Demolition began that fall and will and increase efficiencies. These be complete in the spring of 2019. investments account for 20-30 } Lignite industry companies The restoration (reclamation) percent of a power plant’s costs. (power plants and coal mines) phase of the project will begin in contribute more than $130 the spring of 2019 and should be } North Dakota is currently one million annually through total mostly complete by late 2019. of only 15 states that meet all of annual taxes, including sales, the U.S. Environmental Protection personal, and corporate income } One megawatt-hour (MWh) is Agency’s federal ambient air taxes. enough electricity to serve more quality standards. than 800 homes with an hour’s worth of power.

Plant Operating Company Capacity by MW Coal Creek Station Great River Energy 1,146 Antelope Valley Station Basin Electric Power Cooperative 900 Milton R. Young Station Minnkota Power Cooperative 705 Leland Olds Station Basin Electric Power Cooperative 669 Coyote Station Otter Tail Power Company 427 Heskett Station Montana-Dakota Utilities Co. 100 Spiritwood Station* Great River Energy 99 Total 4,046

* Spiritwood Station is a combined heat and power plant. Its primary product is steam, which is sold to the Dakota Spirit Ethanol biorefinery at Spiritwood Energy Park near Jamestown. The plant also produces some electricity for the regional grid.

6 Spotlight on North Dakota Energy + The Falkirk Mining Company was granted a permit to excavate lignite coal in an area that included Coal Lake, southeast of Underwood. The company chose to preserve the woody draws around the lake that provide cover, food, and water for animals, and not mine the coal stored under them. The above picture shows the mining activity around Coal Lake. Photo courtesy of North American Coal.

MINING

} North Dakota has the second-largest known } North Dakota lignite mines produced a record reserves of lignite in the world (behind only 29.1 million tons in 2017, the highest annual Australia) with an estimated 25 billion tons of tonnage since 2009 and 1.4 million tons more than recoverable resources. It is estimated that the state’s the 2016 total. Nearly 80 percent of lignite is used reserves would last more than 800 years at the to generate electricity, 13 percent is used to make current rate of consumption. synthetic natural gas, and 7 percent is used to produce fertilizer and other products.

Annual Owner/ Mine Location Facilities Served Production Operator Antelope Valley Station and Great Plains The Coteau 8 miles northwest Freedom Mine 14.2 million tons Synfuels Plant, Beulah; Properties of Beulah and Leland Olds Company* Station, Stanton Dakota 5 miles southwest Beulah Mine 500,000 tons Heskett Station, Mandan Westmoreland of Beulah Corporation 4 miles southeast Milton R. Young Station, Center Mine 4.3 million tons BNI Coal Ltd. of Center Center Coal Creek Station, Falkirk Mining Falkirk Mine 8.2 million tons Underwood Underwood; Spiritwood Company* Station, Spiritwood

Coyote Creek 5 miles south of Coyote Creek 2.5 million tons Coyote Station, Beulah Mine Beulah Mining Company*

*Owned by North American Coal Corporation

www.energynd.com 7 + Mining companies must reclaim mined land and return it to its original use and production. After mining around Coal Lake (see photo on page 7), Falkirk Mine and its customer Great River Energy donated more than 700 acres to the NDDOT, creating the Coal Lake Wildlife Management Area. Photo courtesy of North American Coal. MINING

} There are also two Leonardite mines in North } Lignite coal and commercial leonardite are taxed Dakota – the American Colloid Mine near Scranton at a flat rate of 37.5 cents per ton by the state of and the Leonardite Products Mine near Williston. North Dakota. An additional 2-cent per ton tax is Leonardite is a highly oxidized form of lignite that levied for the Lignite Research Fund. is used as a soil amendment and the oil industry as a drilling additive. Both mines have a processing } More than $1 billion in tax revenue has gone plant associated with them. to the state of North Dakota since 1975 from the lignite severance and coal conversion taxes. RECLAMATION

} North Dakota lignite mines practice } More than 28,500 acres of permitted land in the contemporaneous reclamation, which means state have gone through final bond release – the simultaneously mining and reclaiming land. equivalent of about 44 square miles.

} Mining companies typically have three years to } The Falkirk Mine was the nation’s first surface reclaim mined land by grading and respreading the coal mine to operate a survey drone for soil and seeding the land. After that, mines keep reclamation. Pre-mining surveys are used to plan reclaimed land under performance bond for at least for water management and to determine elevation ten years to prove reclaimed land produces crops and placement of topsoil and subsoil. Drones or forages as good as or better than before mining. provide an innovative way to retrieve topographical maps of large areas. Time is saved in the field } Between 1,500 and 2,000 acres of land are because the drone surveys around 400 acres per disturbed by coal mining and reclaimed each year. 50-minute flight. The data is downloaded to a Mining companies spend an average of $30,000 to computer and can be interpreted in a few hours. reclaim one acre of land, but costs can be as high as $60,000 an acre in some instances. Source: Lignite Energy Council, Great River Energy, Basin Electric Power Cooperative, MDU Resources Group, Inc., Otter Tail Power Company, Minnkota Power Cooperative, U.S. Environmental Protection Agency, Falkirk Mining Company

8 Spotlight on North Dakota Energy GENERATION + Montana-Dakota Utilities has an 88-MW, simple cycle natural gas combustion unit, Heskett 3, located next to its coal-based Heskett Station near Mandan. The chimney of the coal-based Heskett Station can be seen to the right.

PEAKING PLANTS

} Peaking plants provide power } Basin Electric Power } Montana-Dakota Utilities has generation companies with rapid Cooperative, Bismarck, operates an 88-MW natural gas-fired unit, response to regional “peaks” to two natural gas-fired peaking Heskett 3, located next to its meet the demand for electricity. stations to help provide electrical coal-based Heskett Station near The additional generating stability in western North Dakota. Mandan. The unit uses a General capacity that these smaller Electric 7EA combustion turbine. facilities provide can be used in § Lonesome Creek Station, extreme weather conditions when located west of Watford City, } Otter Tail Power Company has demand for electricity exceeds the has five, 45-MW units, for a two fuel oil combustion turbines capacity of baseload facilities. total generating capacity of in Jamestown that have a total They are also used to provide 225 MW. capacity of 42.5 MW. power when other resources § Pioneer Generation Station are not available. They can be Sources: Basin Electric Power is located northwest of powered up from stand-by status Cooperative, MDU Resources Group, Williston, and has a total Inc., Otter Tail Power Company to full load very quickly and, in generating capacity of 247 most cases, are operated from MW. a remote site. In North Dakota, the peaking plants are fueled by § Both stations employ General either natural gas or fuel oil. Electric LM 6000 combustion turbine generators. Phase III of the Pioneer Generation Station site generates electricity using reciprocating engines.

www.energynd.com 9 GENERATION + Construction on the second phase of the Thunder Spirit Wind project near Hettinger, N.D., was completed in 2018. The expansion added 16 new wind turbines to the site. Photo courtesy of Allete Clean Energy.

WIND

} North Dakota has more than } While the national wind } The 2018 federal wind energy 3,000 MW of wind energy capacity factor averaged 37 Production Tax Credit (PTC) capacity installed throughout the percent in 2017, North Dakota provides wind developers a state, consisting of more than wind farms typically see higher credit of 2.4 cents per kWh 1,500 wind turbines. rates between 40-50 percent. for the production of electricity from utility-scale turbines during } In per-capita terms, North } North Dakota ranks 11th for the project’s first ten years of Dakota has the highest wind installed wind capacity, getting operation, for projects qualified installed electricity capacity, 27 percent of its net electricity in year 2016. The PTC is phased according to the National generation from wind resources. down in future years to 80 Renewable Laboratory’s 2016 percent of its present value for } The economic impact of wind Renewable Energy Data Book. projects qualified in 2017, 60 energy development in North percent for those qualified in } Wind developers have Dakota in 2016 was more than 2018, and 40 percent for those expressed an interest in building $170 million. This includes $60 qualified in 2019, then it goes to more than 7,000 MW of million in personal income, 500 zero. As before, the law allows additional wind generation in jobs, and $7.7 million in property wind projects to qualify for the North Dakota in the next several taxes. PTC in the year that they start years. While these projects have construction. not been approved or permitted, it is an expression of interest to } The Thunder Spirit Wind project the transmission system operators was expanded by 48 MW in of potential projects. 2018. ALLETE Clean Energy was the original developer of the project, but was sold to Montana- Dakota Utilities in October 2018.

10 Spotlight on North Dakota Energy } ALLETE Clean Energy is constructing the 100-MW Glen CAPACITY FACTOR: Ullin Energy Center wind farm Capacity factor is the actual electricity output of a power in Morton and Mercer counties generating facility, divided by the maximum output it could that is expected to be completed provide if it ran at full output 100 percent of the time for a in 2019. The site will be owned full year. In other words, if the capacity factor of a wind farm and operated by ALLETE Clean averages 38 percent, that means the total generating capacity of Energy, and electricity produced that wind farm is available 38 percent of the time on average. will be supplied to Xcel Energy under a power purchase agreement.

Sources: North Dakota Public Service Commission, NextEra Energy, Minnesota Power, Acciona Wind Energy, Iberdrola Renewables, MDU Resources Group, Inc., Basin Electric Power Cooperative, Minnkota Power Cooperative, American Wind Energy Association, U.S. National Renewable Energy Laboratory, Wind Powering America, U.S. Energy Information Administration

Installed Wind Capacity 2018

Installed Wind Capacity 10,000 MW 5,001-10,000 MW 1,001-5,000 MW 101-1,000 MW 0-100 MW

+ Map created by Bismarck State College National Energy Center of Excellence using data from the American Wind Energy Association, current through the fourth quarter of 2018.

www.energynd.com 11 Capacity Wind Facility County Owner Company Power Purchaser ** (by MW) Ashtabula Wind Energy Center I (2008) Barnes NextEra Energy Minnkota Power 148.5 Great River Energy (51 MW), Ashtabula Wind Energy Center II (2009) Griggs, Steele NextEra Energy 120 Minnkota Power (69 MW) Ashtabula Wind Energy Center III (2010) Barnes NextEra Energy Otter Tail Power Company 62.4 Ashtabula Wind Farm (2008) Barnes Otter Tail Power Company 48 Baldwin Wind Energy Center (2010) Burleigh NextEra Energy Basin Electric Power Cooperative 102.4 Bison Wind Energy Center 1 (2012, 81.8 MW) Bison 2 and 3 (2013, 210 MW) Oliver, Morton Minnesota Power 496.6 Bison 4 (2015, 204.8 MW) Border Winds Project (2016) Rolette Xcel Energy 150 Brady Wind I Energy Center (2016, 150 MW) Stark, Hettinger NextEra Energy Basin Electric Power Cooperative 300 Brady Wind II Energy Center (2016, 150 MW) Cedar Hills Wind Farm (2010) Bowman Montana-Dakota Utilities Co. 19.5 Courtenay Wind Project (2016) Stutsman Xcel Energy 200.5 Langdon Wind Energy Center (2007) Cavalier Otter Tail Power Company 40.5 Langdon Wind Energy Center I (2007, 118.5 MW) Minnkota Power Cooperative (139.5 MW), Cavalier NextEra Energy 159 Langdon II (2009, 40.5 MW) Otter Tail Power Company (19.5 MW) Lindahl Wind Project (2017) Williams Tradewind Energy Basin Electric Power Cooperative 150 Luverne Wind Farm (2009) Steele Otter Tail Power Company 49.5 Basin Electric Power Cooperative (40 MW), North Dakota Wind Energy Center – Edgeley (2003) LaMoure NextEra Energy 61 Otter Tail Power Company (21 MW) Oliver Wind Energy Center I (2006, 50.6 MW); Oliver NextEra Energy Minnesota Power 98.6 Oliver II (2007, 48 MW) Oliver Wind III Project (2016-2017) Oliver, Morton NextEra Energy Minnkota Power Cooperative 100 Petersburg Wind Project (Infinity Wind Energy) (2002) Nelson Minnkota Power Cooperative 0.9 PrairieWinds 1 (2009) Ward Basin Electric Power Cooperative 122.6 Rugby Wind Power Project (2009) Pierce Iberdrola Renewables 149.1 Sunflower Wind Project (2016) Morton-Stark Novatus Energy Basin Electric Power Cooperative 104 Tatanka Wind Farm* Dickey Acciona Wind Energy Midwest Independent System Operator (MISO) 90 Thunder Spirit Wind (2015-2018) Adams Montana-Dakota Utilities Co. 107.5 Valley City Wind Project (Infinity Wind Energy) (2002) Barnes Minnkota Power Cooperative 0.9 Velva Wind Farm (2005) McHenry Acciona Wind Energy Xcel Energy 12 Wilton Wind Energy Center I (2006, 49.5 MW); Burleigh NextEra Energy Basin Electric Power Cooperative 99 Wilton II (2009, 49.5 MW) Statewide demonstration and privately owned projects N/A Approx. 3

Total 3,045

12 Spotlight on North Dakota Energy Capacity Wind Facility County Owner Company Power Purchaser ** (by MW) Ashtabula Wind Energy Center I (2008) Barnes NextEra Energy Minnkota Power 148.5 Great River Energy (51 MW), Ashtabula Wind Energy Center II (2009) Griggs, Steele NextEra Energy 120 Minnkota Power (69 MW) Ashtabula Wind Energy Center III (2010) Barnes NextEra Energy Otter Tail Power Company 62.4 Ashtabula Wind Farm (2008) Barnes Otter Tail Power Company 48 Baldwin Wind Energy Center (2010) Burleigh NextEra Energy Basin Electric Power Cooperative 102.4 Bison Wind Energy Center 1 (2012, 81.8 MW) Bison 2 and 3 (2013, 210 MW) Oliver, Morton Minnesota Power 496.6 Bison 4 (2015, 204.8 MW) Border Winds Project (2016) Rolette Xcel Energy 150 Brady Wind I Energy Center (2016, 150 MW) Stark, Hettinger NextEra Energy Basin Electric Power Cooperative 300 Brady Wind II Energy Center (2016, 150 MW) Cedar Hills Wind Farm (2010) Bowman Montana-Dakota Utilities Co. 19.5 Courtenay Wind Project (2016) Stutsman Xcel Energy 200.5 Langdon Wind Energy Center (2007) Cavalier Otter Tail Power Company 40.5 Langdon Wind Energy Center I (2007, 118.5 MW) Minnkota Power Cooperative (139.5 MW), Cavalier NextEra Energy 159 Langdon II (2009, 40.5 MW) Otter Tail Power Company (19.5 MW) Lindahl Wind Project (2017) Williams Tradewind Energy Basin Electric Power Cooperative 150 Luverne Wind Farm (2009) Steele Otter Tail Power Company 49.5 Basin Electric Power Cooperative (40 MW), North Dakota Wind Energy Center – Edgeley (2003) LaMoure NextEra Energy 61 Otter Tail Power Company (21 MW) Oliver Wind Energy Center I (2006, 50.6 MW); Oliver NextEra Energy Minnesota Power 98.6 Oliver II (2007, 48 MW) Oliver Wind III Project (2016-2017) Oliver, Morton NextEra Energy Minnkota Power Cooperative 100 Petersburg Wind Project (Infinity Wind Energy) (2002) Nelson Minnkota Power Cooperative 0.9 PrairieWinds 1 (2009) Ward Basin Electric Power Cooperative 122.6 Rugby Wind Power Project (2009) Pierce Iberdrola Renewables 149.1 Sunflower Wind Project (2016) Morton-Stark Novatus Energy Basin Electric Power Cooperative 104 Tatanka Wind Farm* Dickey Acciona Wind Energy Midwest Independent System Operator (MISO) 90 Thunder Spirit Wind (2015-2018) Adams Montana-Dakota Utilities Co. 107.5 Valley City Wind Project (Infinity Wind Energy) (2002) Barnes Minnkota Power Cooperative 0.9 Velva Wind Farm (2005) McHenry Acciona Wind Energy Xcel Energy 12 Wilton Wind Energy Center I (2006, 49.5 MW); Burleigh NextEra Energy Basin Electric Power Cooperative 99 Wilton II (2009, 49.5 MW) Statewide demonstration and privately owned projects N/A Approx. 3

Total 3,045

*Tatanka Wind Farm straddles the North Dakota/South Dakota border with turbines across two counties in N.D. and one county in S.D. The wind farm is 180 MW total with 90 MW in North Dakota.

**If other than project owner.

www.energynd.com 13 GEOTHERMAL

} According to the National } The University of North Dakota Sources: National Renewable Energy Renewable Energy Laboratory, Petroleum Research Center Laboratory, University of North Dakota Department of Geology and Geological western North Dakota has continues to study the feasibility of Engineering favorable locations for deep using oil well sites in the Bakken enhanced geothermal systems to generate up to 300 MW of (EGS). EGS is a technology that electricity using geothermal uses heat from the earth to turn energy. water into steam, which drives a turbine generator to produce electricity.

HYDROELECTRIC

} The only producer of } The electricity from Garrison of Minnesota, Iowa, Montana, hydroelectric power in North Dam is marketed by the Western South Dakota and Nebraska. Dakota is the Garrison Dam, Area Power Administration. The Western Area Power run by the U.S. Army Corps of Customers in North Dakota Administration is one of four Engineers, Omaha District. It has include municipal utilities, power-marketing administrations been operating since 1955. Native American tribes, state within the U.S. Department of agencies, the two Air Force Energy whose role is to market } The Garrison Dam has five bases, educational institutions, and transmit electricity from turbines with maximum combined irrigation districts and rural multi-use water projects. power output of 583 MW. water entities, and electric power cooperatives. Much of } Lake Sakakawea, created by } In fiscal year 2017, the dam the electrical power generated the Garrison Dam, is the third produced 2.5 million MWh of at Garrison Dam is marketed to largest reservoir in the United electricity. customers outside North Dakota, States by volume. including customers in the states Sources: U.S. Army Corps of Engineers, Western Area Power Administration

SOLAR

} Solar energy technology } Bismarck State College has an } Verendrye Electric Cooperative, is based on two main types: 8-kW PV solar array on campus Velva, N.D., has the largest solar photovoltaics (PV), which is the composed of both crystalline program in the state with more most common way of producing and thin panel solar systems so than 290 solar-powered water solar electricity in North Dakota, students have the opportunity to pumps throughout its service and concentrated solar power study both. territory, including 19 systems (CSP). CSP typically uses mirrors installed in 2018. The pumps are to concentrate the sun’s rays and primarily used in pasture wells create heat that, in turn, drives a in remote areas where building heat or steam engine. PV power power lines is cost prohibitive. uses the sun’s rays to create direct current electricity.

14 Spotlight on North Dakota Energy Annual Solar Output (kWh) 1000

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000

000

2000

0 A A O N GENERATION + Prairie Sun Community Solar produced 129,843 kWh in 2018, which would give it a capacity factor of 15 percent. The average member that had one panel would have received a credit of about $37 from the energy produced. The 2018 output represents .01 percent of Cass County’s electric sales. Graph created by Bismarck State College National Energy Center of Excellence using Prairie Sun Community Solar data.

SOLAR

} Cass County Electric } Whiting Petroleum uses PV in Cooperative in Fargo installed North Dakota for some systems a 102-kW solar array in 2016, in the petroleum extraction called Prairie Sun Community process, like automation controls, Solar. It is the first community programmable logic controllers, solar project in the state and flare ignitors, and combustor consists of 324 solar panels controls. These systems allow an located on land owned by the city operator to start up, monitor, and of Fargo. The 2018 output was shut down operations as needed. 129,843 kWh, which was about 11.5 percent below the predicted Sources: National Renewable Energy output using modeling tools from Laboratory, Verendrye Electric the National Renewable Energy Cooperative, Bismarck State College, Cass County Electric Cooperative, Laboratory, due largely to some Minnkota Power Cooperative, Whiting technical glitches and equipment Petroleum malfunctions.

} Northern Plains and Dakota Valley Electric Cooperatives + Photo above shows Northern installed a 16-panel solar system Plains and Dakota Valley Electric at Northern Plains’ Carrington Cooperatives’ demonstration office in 2015. The total rated solar array. Total output is rated output is 6.56 kW, and the at 6.56 kW. Photo courtesy cooperatives monitor real time of Northern Plains Electric data from the system as a Cooperative. demonstration of what might be used on a small farm, residence, or business. The solar project operated as expected in 2017, saving 8,675 kWh of energy.

www.energynd.com 15 RECOVERED ENERGY

} Recovered energy generation } The sites produce electricity } A subsidiary of Ormat (REG), also known as heat- using exhaust from compressor Technologies developed the recovery generation or waste heat stations on the Northern recovered energy generation. energy, is a process of capturing Border Pipeline. The Northern This is the first use of this the heat from hot exhaust to drive Border Pipeline is a natural gas technology on a natural gas a turbine and create electricity. transportation system of 1,398 pipeline in the United States. miles that links the Midwest with } There are four REG sites in reserves in Canada. Sources: Basin Electric Power North Dakota. Basin Electric Cooperative, MDU Resources Group, Inc. Power Cooperative purchases the electricity from three sites owned by Ormat near Manning, St. Anthony, and Zeeland (5.5 MW each); and Montana-Dakota Utilities owns one site near Glen Ullin (5.3 MW).

Minot Williston

Grand Forks Minot Williston

Grand Forks

Dickinson Bismarck Fargo

Dickinson Bismarck Fargo

RecoveredRecovered EnergyEnergy Generation Generation NorthernNorthern Border Pipeline Pipeline + Map courtesy of Bismarck State College National Energy Center of Excellence.

16 Spotlight on North Dakota Energy TRANSMISSION & DISTRIBUTION

} The North Dakota Transmission Authority was established by the state legislature in 2005 to facilitate and develop transmission in North Dakota to accommodate new energy development.

} Otter Tail Power Company and Montana-Dakota Utilities Co. constructed the 163-mile Big Stone South to Ellendale Transmission Line. The 345-kV line connects the new Big Stone South Substation near Big Stone City, S.D., to the new Ellendale Substation near Ellendale, N.D. The line was energized in February 2019.

} Xcel Energy partnered in early 2017 with the Federal Aviation Administration to further study safe operation of unmanned aircraft system (drone) technology to inspect transmission lines for damage. Xcel Energy has been working the past few years with the University of North Dakota and other partners to conduct test flights in North Dakota using drones. Research will be conducted for 18-24 months and include inspection of more than 20,000 miles of transmission lines in Texas, Minnesota, South Dakota and North Dakota.

} A 400-kV direct current transmission line extending from the Coal Creek Station, Underwood, N.D., will be undergoing an upgrade to the inverters at each end of the line. Preparatory work began in 2018, and the majority of the work will be completed in conjunction with a planned outage at Coal Creek in the spring of 2019. The upgrade will result in an increase of line capacity. + The transmission line above is a double circuit AC transmission line. It carries 345,000 volts of } Transmission costs vary depending on voltage, electricity from the Antelope Valley Station, Beulah, terrain type, right-of-way costs, and many other N.D., to its sister station, the Leland Olds Station factors. Average transmission costs for a new 345- near Stanton, N.D. Notice there are three wires on kV line can be $1.5-$2 million per mile. each side of the tower. A typical AC transmission line has three conductors. The towers shown here are carrying two AC transmission lines. There are also Sources: North Dakota Transmission Authority, Otter Tail Power Company, MDU Resources Group, Inc., ALLETE Clean two wires at the very top of the towers. These two Energy, Minnkota Power Cooperative, Basin Electric Power wires are called overhead ground wires. In the event Cooperative a tower is struck by lightning, the OHGW directs the energy from the strike to ground.

www.energynd.com 17 MODES OF HIGH VOLTAGE ELECTRIC TRANSMISSION

} North Dakota has more than 65,000 miles of transmission and distribution lines. Transmission lines are high-voltage lines that carry large volumes of electricity long distances. Distribution lines carry lower-voltage electricity from a local substation to nearby homes.

} The electricity that we use in our homes, offices and factories is alternating current (AC). It is named as such because the voltage goes from positive to negative 60 times per second. Electricity that is generated by rotating generators is generated as AC. Transformers can easily be used to change to high voltage for efficient transmission and then back to lower voltages that are useful for our houses, offices, and factories. Transmission of electricity is more efficient at higher voltages. Voltages of 115,000, 230,000, and 345,000 are typical in North Dakota. In other areas, 500,000 and even 750,000 volts are used to meet needs. These lines operate in a three-phase mode using sets of three wires on high voltage transmission lines. At the home and office, 120 volts and 240 volts are most common.

} The other type of high voltage transmission that is becoming more common in long distance lines is direct current (DC). Those lines operate with one wire at positive voltage and the other wire at negative voltage. Therefore, DC lines are characterized by sets of two wires. There are only two DC transmission lines in North Dakota. + The transmission line above is a 400,000-volt DC Voltages for DC transmission can also vary. One of transmission line. It carries electricity from the Coal the DC lines in North Dakota operates at 250,000 Creek Station, Underwood, N.D., to a delivery point volts, while the other operates at 400,000 volts. in Minnesota. Notice there are only two conductors, A DC line requires a converter station at each as opposed to three for an AC line. As with an AC end to convert the power from AC current to DC line, this DC line has two OHGW wires to dissipate energy from a lightning strike. current and then back to AC at the other end. It is expensive to build the converter stations, but the line construction is less expensive. The lines are much more efficient than AC transmission of an equivalent amount over an equal distance, meaning there’s less line loss. The higher efficiency pays for the expense of building the converters if the distance is over 300 miles. DC voltage cannot be changed easily without converting back to AC. DC transmission has been demonstrated in uses over 4,000 miles.

18 Spotlight on North Dakota Energy PETROLEUM + Two ConocoPhillips wells located near Keene in McKenzie County are shown in operation. ConocoPhillips holds approximately 620,000 net acres in the Bakken, and had more than 775 operating wells on line at year-end 2018.

OIL & GAS PRODUCTION

} North Dakota’s oil and gas } December 2018 was the all- } As of December 2018, industry has continued steady time high on both oil and gas preliminary figures indicated growth even with sustained production. Figures for December there were 15,351 producing lower prices. According to 2018 indicated oil production of wells, with 88 percent of those in the U.S. Energy Information 43,442,924 barrels or 1,401,385 the Bakken Formation. This is one Administration, the price of sweet barrels/day with gas production well shy from the all-time high crude oil was at $45.75 a barrel reaching 82,150,203 thousand of 15,352 producing wells in in February 2019, as compared cubic feet (MCF), or 2,650,007 October 2018. to the all-time high price in July MCF/day. 2008 of $136.29 per barrel. } Leasing activity for new drilling Prices in the last half of 2018 } Oil and gas production both sites continues to be very low in have ranged from $42-$76 a rose in 2018. This was due to North Dakota, consisting mostly barrel. Despite this, increased companies concentrating drilling of renewals and top leases in efficiencies and technology rigs in the most productive and the Bakken-Three Forks area. have enabled operators to “gassier” parts of the Bakken Multiple wells are being added continue production and remain Formation. to existing drill pads as the competitive at lower prices. production stays in “harvest” } Average rig count in 2018 was mode. Three or more horizontally } In 2012, North Dakota 62 rigs, an increase of 11 from drilled wells can be placed on surpassed both California and the previous year. The all-time one existing pad and as many as Alaska to become the second high was 218 rigs in May 2012. 25 wells on some pads. largest oil producer in the nation, Newer, more advanced rigs behind only Texas. North Dakota operating today are able to drill is also among the top 20 oil more wells faster. Each rig can producers in the world. drill about twice as many wells in a year compared to 2012. More than 99 percent of drilling takes place in the Bakken and Three Forks formations.

www.energynd.com 19 OIL & GAS PRODUCTION

+ The above map shows the placement of shale plays around the Lower 48 states. Map courtesy of U.S. Energy Information Administration.

} A typical North Dakotan § Pays royalties of $9,487,516 Plugging the well involves Bakken well will produce for 42 to mineral owners. cementing the production years. Economic and enhanced § Pays salaries and wages of and surface casing at several oil recovery efforts can extend $2,128,669. different depths to ensure no the life of the well. Based on hydrocarbons or saltwater may an average oil price of $50 per § Pays operating expenses of pass to the surface, in addition barrel, in those 42 years the $1,900,977. to cutting off the surface casing average Bakken well: § Costs $7,072,184 to drill about four feet below the ground. § Produces approximately and complete. Topsoil and subsoil that were 1,170,683 barrels of oil. removed during the initial well } After a well has stopped construction are returned to the § Generates about $31 million producing economically, state law site and the land is returned net profit. requires the operator to plug the to its pre-drilling contours and § Pays approximately well or get it back into production reclaimed as close as practicable $5,083,579 in taxes. within six months. to the way it was prior to drilling. – $2,796,340 gross production taxes. – $2,094,794 extraction tax. – $192,445 sales tax.

20 Spotlight on North Dakota Energy EMPIRE STATE BUILDING Height: 1,454 feet

7 E 800 10,000

PETROLEUM + Horizontal drilling in the Bakken allows companies to drill down two miles into the Bakken formation, turn at a 90-degree angle and drill horizontally for as far as four miles. Diagram courtesy of North Dakota Petroleum Council and North Dakota Department of Mineral Resources.

SHALE ENERGY TECHNOLOGY

} The Bakken shale play } The fluid used in the hydraulic Sources: North Dakota Petroleum was previously undeveloped fracturing process is 98-99.5 Council, North Dakota Department of Mineral Resources, U.S. Energy because conventional drilling percent water and sand mixture. Information Association, FracFocus, methods were not able to Varieties of chemical additives Energy & Environmental Research Center access the trapped oil and are used, depending on the well gas. Technological advances, conditions, to limit the growth including horizontal drilling of bacteria, prevent corrosion and the process of hydraulic of well casing, and to increase fracturing have made it possible efficiencies. for companies to economically drill for oil in the Bakken } The state of North Dakota Formation. requires disclosure of the additives that companies use } With horizontal drilling, via FracFocus.org, a website operators are able to drill more that provides public access wells from a single location, to reported chemicals used thereby accessing more of the in fracking and to provide oil and gas resources in the information on the fracking Bakken while using as much as process. 90 percent less surface area than with traditional vertical drilling. } The amount of water needed to hydraulically fracture a well } Hydraulic fracturing (also continues to increase. In 2006 called “fracking”) is a process the average Bakken well required that pumps a specially blended 2-4 million gallons of water for liquid into a well under high hydraulic fracturing. In 2018 that pressure, creating fractures in average increased to nearly 8-10 the underground rock to allow million gallons per well, with the flow and recovery of oil and a small handful of wells using natural gas. a technique that required 20 million gallons.

www.energynd.com 21 70°F

LIGHTWEIGHT GASES RISE THROUGH THE TRAYS 300°F NAPHTHAS GASOLINE TRAYS 390°F KEROSENES KEROSENE FOR CRUDE OIL IS HOME HEATERS, FIRST SENT TO A JET FUEL FURNACE CRUDE OIL IS 570°F GAS OILS HEATED TO DIESEL FUEL 750°F 840°F DOWNCOMERS LUBRICANTS MOTOR OIL FURNACE 910°F FUEL OIL FUEL FOR SHIPS, HEAVY, UNREFINED CANDLES OIL MOVES DOWNWARD

GASES 1070°F ASPHALT BOTTLED AND NATURAL GAS ROAD TAR PETROLEUM + Oil from the Bakken is a light, “sweet” oil, which means that it is a high-quality oil containing little or no hydrogen sulfide. Refiners prefer sweet crude oil because it yields high-value products such as gasoline, diesel fuel, jet fuel, and heating oil. This diagram of a typical refinery’s distillation tower shows how the petroleum is heated and separated into different product streams. Graphic courtesy of Bismarck State College National Energy Center of Excellence. REFINING

} There are two oil refineries in } Marathon processes Williston } Marathon purchased their North Dakota – one in Mandan, Basin crude oil from North Dickinson Refinery in 2018 from the other is near Dickinson. Dakota to refine into gasoline, Andeavor (its original name diesel fuel, jet fuel, heavy fuel was Dakota Prairie Refining). } The Mandan refinery is now oils, and liquefied petroleum gas. That refinery was constructed by owned by Marathon Petroleum Products are trucked and railed WBI Energy, and subsequently Corp. It was previously owned from Mandan and also shipped purchased by Andeavor in 2016. by Tesoro, and then Andeavor. east via pipeline to eastern North It was the first greenfield diesel Marathon purchased the refinery Dakota and Minnesota. refinery to be built in the U.S. from Andeavor in April 2018. since the late 1970s and came It began operations in 1954 } Marathon employs more than online in May 2015. Located and is the largest refinery in the 275 people in the Bismarck- near Dickinson, the refinery can state. The refinery has a crude Mandan area and more than process 19,000 bpd of Bakken oil processing capacity of 71,000 100 employees in western North crude oil into diesel fuel and barrels per day (bpd). One barrel Dakota and eastern Montana other petrochemical components. is equal to 42 gallons. with the Andeavor Logistics High The diesel fuel is marketed within Plains Crude pipeline system. North Dakota, while the other } Because of high demand for components are shipped to out- diesel fuel in the region, in 2012 of-state customers or to other the Mandan refinery expanded refineries for further processing. its Distillate Desulfurization Unit capacity by 5,000 barrels of diesel per day to bring the plant’s Source: Marathon total diesel hydrotreating capacity to 22,000 bpd.

22 Spotlight on North Dakota Energy WW BB CC O O T Williston Basin CrudeT Oil Transportation Estimated Pipeline Export Estimated Pipeline Export Estimated Rail Estimated Rail Truck to Canadian Pipelines Truck to Canadian Pipelines Refined Refined PETROLEUM + Transportation of Williston Basin crude oil changes depending on the Brent – WTI (West Texas Intermediate) price spread. With additional pipeline capacity and market conditions, the region has seen increased use of pipelines over rail transportation. Data courtesy of the North Dakota Pipeline Authority as of November 2018.

PIPELINES

} The North Dakota Pipeline } Several additional pipeline } During construction of a Authority was created by the expansion projects to transport pipeline, topsoil, and subsoil are state legislature in 2007 to assist the increased oil and gas removed and stockpiled nearby. development of pipeline facilities production in the state have been After pipeline installation, the to support energy-related proposed or are in the planning topsoil and subsoil are returned commodities. stages. to the site, and the land is returned to its pre-construction } There are more than 30,000 } Bakken natural gas has a high contours and production. This miles of gathering and content of natural gas liquids includes getting land into transmission pipelines in North (NGL), such as ethane, propane, condition for crop production or Dakota. The United States has butane, and natural gasoline. grazing, or working with wildlife the largest network of pipelines in Updated forecast calculations groups to plant native grasses the world. from the North Dakota Pipeline or other vegetation for wildlife Authority estimate a potential of forage or habitat. } North Dakota makes use of 1.0 million to 1.2 million barrels three product types of pipelines: per day of NGL production from 17 major crude oil pipelines, nine Sources: North Dakota Pipeline North Dakota during the coming Authority, North Dakota Petroleum major natural gas pipelines, and decades. Council one carbon dioxide pipeline. } Pipelines remain the safest } A 100,000-barrel-per-day mode of energy transportation pipeline would be equal to 500 according to the U.S. Department truckloads per day or about 140 of Transportation with more than rail cars. 99.99 percent of all petroleum and natural gas products safely reaching their destinations.

www.energynd.com 23 PIPELINES

NorthNorth Dakota Dakota Crude Crude Oil Oil Pipelines Pipelines

Divide Renville Burke Bottineau Rolette Cavalier Pembina Towner

Williams Pierce Walsh Ramsey McHenry Mountrail Ward Benson Grand Nelson Forks

McKenzie Eddy McLean Sheridan Wells Foster Griggs Steele Traill Dunn Mercer

Billings Oliver Barnes Golden Burleigh Kidder Stutsman Cass Valley D Stark MarathonD Marathon Petroleum Petroleum

Morton Slope Ransom Hettinger Logan LaMoure Grant Richland Emmons Bowman Sargent Adams Sioux McIntosh Dickey

D Refinery Basin Transload Butte Double H Hiland Bridger Bakken Oil Express Belle Fourche Crestwood Enbridge Keystone Pipeline Targa BakkenLink Bridger Dakota Access Four Bears Little Missouri Marathon

Disclaimer: Neither the State of North Dakota, nor any agency, officer, or employee of the State of North Dakota warrants the accuracy or reliability of this product and shall not be held responsible for any losses caused by reliance on this product. Portions of the information may be incorrect or out of date. Any person or entity that relies on any information obtained from this product does so at his or her own risk.

NorthNorth Dakota Dakota Natural Natural Gas Gas Pipelines Pipelines D D Divide Renville Bottineau Pembina Burke Rolette Cavalier D Towner

D D Pierce Williams DD Walsh D D Ramsey Mountrail McHenry Ward D Benson D Nelson Grand D Forks D D Eddy D D McKenzie McLean Sheridan Wells D Foster Griggs Steele Traill D Dunn Mercer

Oliver D Billings Barnes Burleigh Kidder Stutsman Cass Golden D Valley Stark Morton

Slope Hettinger Ransom Logan LaMoure Grant D Richland

Bowman Emmons D D Adams Sioux McIntosh Dickey Sargent

D Gas Plants Alliance Hess ONEOK Bakken Mature Aux Sable Kinder Morgan WBI Energy Bakken Bison Northern Border Whiting Three Forks

Disclaimer: Neither the State of North Dakota, nor any agency, officer, or employee of the State of North Dakota warrants the accuracy or reliability of this product and shall not be held responsible for any Updated: February 2018 losses caused by reliance on this product. Portions of the information may be incorrect or out of date. Any person or entity that relies on any information obtained from this product does so at his or her own risk. + Maps courtesy of North Dakota Pipeline Authority.

24 Spotlight on North Dakota Energy PETROLEUM + The above photo shows the Great Plains Synfuels Plant in the foreground. The plant is owned by Dakota Gasification Company, a subsidiary of Basin Electric Power Cooperative, and is located north of Beulah, N.D. In the background (blue buildings) is the Antelope Valley Station, a 900-MW capacity coal-based electric generating station. The two plants represent a $4-billion investment in North Dakota’s energy development. Photo courtesy of Basin Electric Power Cooperative. SYNTHETIC NATURAL GAS

} The Dakota Gasification recovery. The Synfuels Plant has } Urea is the 11th additional Company’s Great Plains Synfuels delivered more than 35 million product produced at the Plant, north of Beulah, is the metric ton of carbon dioxide gasification plant. Besides natural only commercial-scale coal since October 2000. gas, these products include: gasification plant in the United § Cresylic acid States that manufactures synthetic } Weyburn oil field operators natural gas from lignite coal. It in Saskatchewan, predict that § Phenol produces up to 175 million cubic injecting carbon dioxide can § Tar oil feet of natural gas a day, which is extend the life of the Weyburn § Ammonium sulfate shipped via the Northern Border field by about 30 years. (agricultural fertilizer) Pipeline to the eastern United } Contractors broke ground on States and used for heating § Anhydrous ammonia a urea facility in July 2014 at homes and industrial feedstock. (agricultural fertilizer) Dakota Gasification Company’s § Carbon dioxide and liquefied } Great Plains Synfuels Plant. The plant uses about 18,000 carbon dioxide tons of lignite coal each day, The project was completed in supplied via the Freedom Mine. early 2018 and produces about § Krypton/xenon gases Besides synthetic natural gas, 1,100 tons of urea a day. About § Nitrogen it produces many additional 185,000 gallons per day of § Naphtha products that are marketed diesel exhaust fluid are also throughout the United States and produced and sold, as well as § Diesel exhaust fluid worldwide, including fertilizers liquid nitrogen. and petrochemicals. Sources: Basin Electric Power } The Synfuels Plant recorded its Cooperative, Dakota Gasification } The Synfuels Plant is the largest highest ever average capacity Company carbon dioxide sequestration factor in 2018 at 94.8 percent. project in the world, capturing up The previous record was set to 3 million metric tons of carbon in 1998 at 94.6 percent, and dioxide per year that it pipes to predated current environmental the aged Weyburn oil fields in flaring limitations. Canada for use in enhanced oil

www.energynd.com 25 PETROLEUM + Two operators monitor operations at the Tioga Gas Plant in Williams County. The plant is owned and operated by Hess Corporation. Hess employs 480 people in North Dakota.

NATURAL GAS PROCESSING

} The North Dakota Pipeline } A challenge of the petroleum } According to the North Authority recently updated its industry is capturing the natural Dakota Department of Mineral natural gas forecast which gas co-produced with oil. As Resources, private industry has estimates North Dakota could be of December 2018, 19 percent invested more than $13 billion in producing 4.5-5.5 billion cubic of the natural gas produced additional natural gas gathering feet of natural gas each day in in North Dakota was being and processing infrastructure to the late 2030s. This is up from burned off, or “flared,” due to reduce flaring, and another $3.3 the 2018 natural gas production lack of pipelines or challenges billion is planned in the coming of roughly 2.5 billion cubic feet on existing infrastructure. In years. per day. September 2015, the North Dakota Industrial Commission } Since 2010, natural gas } North Dakota currently has 30 revised the 2014 natural gas processing capacity in North natural gas processing plants targets for Bakken and Three Dakota has grown nearly 387 operating in western North Forks production as follows: percent, increasing from 491 Dakota, and six other new MMCFD to 2,400 MMCFD in facilities are planned or under § 74% Capture – year-end 2018. Additional construction. Oct. 1, 2014 - Dec. 31, 2014 capacity is planned for 2019 and § 77% Capture – 2020. Jan. 1, 2015 - Mar. 31, 2016 } The state’s first liquefied § 80% Capture – natural gas plant is near Tioga. Apr. 1, 2016 - Oct. 31, 2016 Liquefied natural gas is natural § 85% Capture – gas that has been converted to a Nov. 1, 2016 - Oct. 31, 2018 liquid form for easier storage and § 88% Capture – transportation. Nov. 1, 2018 - Oct. 31, 2020 Source: North Dakota Pipeline Authority, § 91% Capture – ONEOK beginning Nov. 1, 2020

26 Spotlight on North Dakota Energy Processing Capacity – Natural Gas Owner Company County Million Cubic Feet Per Facility Day (MMCFD) 1804 Ltd Spring Brook Williams 45 Arrow Field Services Arrow McKenzie 150 Aux Sable – Chicago, IL Prairie Rose Mountrail 126* Caliber Midstream Hay Butte McKenzie 10 Hess Tioga Williams 250 Kinder Morgan Watford City McKenzie 90 Kinder Morgan Roosevelt McKenzie 200 Kinder Morgan Badlands Bowman 40 Kinder Morgan Norse Divide 25 Liberty Midstream Solutions County Line Williams 30 Marathon Robinson Lake Mountrail 150 Marathon Belfield Stark 35 Oasis Wild Basin McKenzie 320 ONEOK Lonesome Creek McKenzie 240 ONEOK Stateline I Williams 120 ONEOK Stateline II Williams 120 ONEOK Garden Creek I McKenzie 120 ONEOK Garden Creek II McKenzie 120 ONEOK Garden Creek III McKenzie 120 ONEOK Grasslands McKenzie 90 ONEOK Bear Creek Dunn 130 ONEOK Demicks Lake McKenzie 200 ONEOK Demicks Lake II McKenzie 200 Petro Hunt Little Knife Billings 27 Steel Reef Lignite Burke 6 Targa/Hess JV LM4 McKenzie 200 Targa Resources Badlands McKenzie 90 True Oil Red Wing Creek McKenzie 15 USG Midstream Bakken DeWitt Divide 3 Whiting Oil & Gas Ray Williams 25 XTO – Nesson Ray Williams 25 Total 3,322

*Aux Sable facility has capacity to transport and process up to 110 MMCFD of North Dakota natural gas at its Chicago facility. **ONEOK facilities are under construction with an expected 2019/2020 in service date.

www.energynd.com 27 PETROLEUM MARKETING / PROPANE

} According to the North Dakota } In 2018, retail petroleum } North Dakota petroleum Petroleum Marketers Association, dealers sold 445,309,856 gallons marketers also supply another there are more than 400 of taxable gasoline in the state, fuel critical to the state – petroleum marketers in North as well as 751,611,139 gallons propane. Propane is a 100 Dakota. The list includes service of taxable special fuels other than percent domestic fuel, serving station dealers, convenience propane (mostly diesel). North to fortify national and energy stores and truck stops. These Dakota petroleum marketers security. Propane supplies have operations deal in every aspect of continue to support research and grown dramatically in recent refined petroleum and renewable development of renewable fuels years because of the numerous fuel products ranging from as viable sources of alternate oil shale plays in the United wholesale and supply to the energy. States. Propane serves a variety numerous retail outlets scattered of residential, commercial and across the state. industrial needs. It is used as the prime heating source in 13.4 percent of homes in North Dakota. In 2018, the state’s propane marketers sold roughly 165.4 million gallons of propane.

Source: North Dakota Petroleum Marketers Association

ETHANOL

} North Dakota’s five ethanol } The state’s ethanol industry } Approximately 160-180 plants have an annual production generates nearly $625 million in million bushels of corn are used capacity of nearly 525 million economic activity each year and annually, with more than 80 gallons per year, which is more directly employs more than 230 percent of the corn purchased than five times the production a workers in rural communities from North Dakota farmers. decade ago. across the state.

Corn Used Ethanol Capacity DDG Plant Location Employees (million (million gallons) (tons) bushels) Midwest Ag Energy – Underwood 42 70 25 200,000 Blue Flint Ethanol Hankinson Renewable Hankinson 47 145 51 440,000 Energy, LLC Red Trail Energy, LLC Richardton 48 63 23 180,000 Tharaldson Ethanol Casselton 55 175 65 500,000 Midwest Ag Energy – Spiritwood 40 70 25 200,000 Dakota Spirit Totals 232 523 189 1,520,000

28 Spotlight on North Dakota Energy BIOFUELS + The Dakota Spirit ethanol plant, owned by Midwest AgEnergy, is co-located with Great River Energy’s Spiritwood Station near Spiritwood, N.D. Steam from the Spiritwood Station is used to power the refining process.

ETHANOL

} One-third of every bushel of } In a modern ethanol facility, } North Dakota is a national grain used for ethanol production one bushel of corn produces 2.8 leader in the installation of flex- returns to the animal feed market gallons of ethanol, 18 pounds fuel blender pumps, which allow in the form of dried distillers of livestock feed, 18 pounds of most vehicle owners the option of grains (DDGs). More than carbon dioxide, and up to one a 15 percent ethanol blend, and 1.5 million tons of DDGs are pound of corn oil. higher percentage ethanol blends produced in the state annually. for owner/operators of flex-fuel } The five ethanol processing vehicles. There are 40 locations } Approximately 10 percent of plants in North Dakota also statewide that offer E15 – E85 the ethanol produced annually produced 10.33 million gallons fuel blends, with more than 20 in North Dakota is blended with of corn oil. of those locations offering E15 gasoline and sold within the fuel specifically. Nearly all retail } E15 (85 percent gasoline, 15 state. The remaining 90 percent gasoline dealers offer E10 fuel. is shipped primarily to the east or percent ethanol) is for use in all west coasts. 2001 and newer cars and light- duty vehicles, as well as flex-fuel Source: North Dakota Ethanol Council vehicles. These vehicles make up nearly 90 percent of the light duty vehicles on the road today.

www.energynd.com 29 BIOMASS / BIODIESEL

} Biomass includes all plant } North Dakota’s only biodiesel } Research is being done on and animal matter, such as production facility is located near biomass availability from crop wood waste, energy crops, Velva. The ADM plant has the residues, and the potential use crop residues, and other forms potential to produce 85 million of oilseed crops like carinata, of organic waste. Harvested gallons of biodiesel per year. canola, and camelina to biomass can be used to generate The facility is currently producing produce jet fuel for military and various forms of energy, such as biodiesel with canola oil provided commercial aviation uses. The heat, electricity, and biofuels. by an adjacent crushing plant. field research is being conducted Because of low in-state usage, at the USDA Northern Great } Biodiesel is a domestically most of the produced biodiesel Plains Research Laboratory in produced, renewable fuel that is shipped to other states or to Mandan. can be manufactured from Canada. new and used vegetable oils, Sources: Great River Energy, Clean animal fats, and recycled } At the Marathon oil refinery Cities (DOE), City of Bismarck, USDA restaurant grease. Biodiesel’s in Dickinson, production began Northern Great Plains Research physical properties are similar in June 2018 to co-process Laboratory, Marathon (formerly Andeavor) to those of petroleum diesel, renewable feedstock along with but with significantly reduced Bakken crude oil to produce a greenhouse gas emissions and five percent renewable diesel toxic air pollutants. Biodiesel can blend. A retrofit of the plant be blended and used in many allows co-processing of up different concentrations. The most to 16,800 gallons per day of common biodiesel blend is B20 renewable feedstock using (20 percent biodiesel, 80 percent regionally sourced soybean petroleum diesel), which qualifies oil and distillers corn oil from for fleet compliance under the ethanol plants. federal Energy Policy Act of 1992.

ENERGY RESEARCH

} North Dakota energy industry partners are by research and development dollars from the State working with officials from the state and the U.S. of North Dakota and the Department of Energy, Department of Energy on carbon solutions for the along with private sector investment. Research and electric generation industry. The Lignite Energy development cost for a larger scale, more efficient Council, BNI Energy, Minnkota Power Cooperative, installation of the technology in North Dakota is and Basin Electric Power Cooperative are estimated to be around $1.25 billion by 2024. collaborating to develop these technologies for both electricity generation and CO2 capture, including } Red Trail Energy (RTE), which owns an ethanol the Allam Cycle and Project Tundra. plant near Richardton, North Dakota, and the Energy and Environmental Research Center (EERC) } Project Tundra is a proposed carbon dioxide- began investigating carbon capture, utilization, capture retrofit of Unit 2 of the Milton R. Young and storage (CCUS) as a way to reduce the Station near Center. Similar technology for this carbon dioxide emissions associated with ethanol project was recently deployed at NRG’s Petra Nova production. Reducing emissions at an ethanol project in Texas as a first-of-a-kind installation. The facility makes the produced fuel more valuable to project is presently in the midst of feasibility and pre- states that have low-carbon fuel programs, such as engineering and design work, with hopes to move California, and could qualify for federal tax credits to front-end engineering and design phase this year. for capturing and storing CO2 in deep geologic The work has been strongly supported and funded formations. In partnership with the North Dakota

30 Spotlight on North Dakota Energy + A SkySkopes drone strings a transmission line on a newly constructed 765-kilovolt electrical tower in Indiana. The North Dakota based UAS company was the first in the country to use drones to string electrical lines, which is a safer and less expensive method than using helicopters or other means. Photo courtesy of SkySkopes.

Industrial Commission (NDIC) through the North energy applications such as wind turbines and Dakota Renewable Energy Program and with the hybrid/electric vehicles. Project sponsors include U.S. Department of Energy (DOE), research has the DOE, the NDIC Lignite Research Program, been ongoing since 2016. Preliminary technical Great River Energy, North American Coal, Minnkota and economic feasibility of CCUS technology Power, and Great Northern Properties. with ethanol production has been successfully demonstrated for the RTE site in previous phases } SkySkopes, Grand Forks, N.D., is developing new and current activities are focused on facilities technology for the energy industry by using drones, design, geologic characterization, and public commonly referred to as unmanned aircraft systems outreach. (UAS). Sophisticated UAS drones are increasingly being used for power line inspections, optical gas } In other research studies, the University of imaging (used for detecting fugitive gas emissions), North Dakota’s Department of Civil Engineering mapping and imaging, 3-D modeling of terrain is teaming up with Great River Energy and two and rights-of-way, engineering applications, regional construction firms to determine whether fly transportation planning, and pipeline monitoring. ash from lignite-based power plant can be used as a mineral filler in asphalt pavement. } The NDIC, through its Renewable Energy Program, provided funding for the following } EERC is also conducting research on extracting research projects in 2018: rare earth elements from lignite coal. While 90 § Integrated Carbon Capture and Storage for percent of rare earth elements are produced in North Dakota Ethanol Production - Phase III China, EERC has received more than $3.5 million ($500,000) in funding to find a way to extract those elements from lignite. Rare earth elements include europium, § Preparation of Graphene-Modified LiFeP04 dysprosium, erbium, terbium, neodymium, Cathode for Li-Ion Battery ($238,366) holmium, scandium, lutetium, and yttrium, among § Low-Pressure Electrolytic Ammonia Production others. They’re used in everyday items, such as ($437,000) computer memory chips, rechargeable batteries, § Barley Protein Concentrate ($83,810) DVDs, cell phones, catalytic converters, magnets, fluorescent lighting, electronics and more. Critical § Fargo’s Smart Energy Ramp ($305,000) for defense, they are used by the military in night- vision goggles, precision-guided weapons, GPS, and electronics. They are also essential for green Sources: ALLETE, Basin Electric Power Cooperative, Energy & Environmental Research Center

www.energynd.com 31 + Ryan Nissan in Minot features an electric vehicle charging station on its lot. The number of publicly available charging stations has increased significantly within the past year. Photo courtesy of Ryan Nissan.

ENERGY EFFICIENCY

} The North Dakota Department of Commerce } The North Dakota Industrial Commission has an Office of Renewable Energy and Energy awarded a contact in December 2018 to Fargo’s Efficiency that promotes efficiency activities within Smart Energy Ramp project. The objective is to the state in both the public and private sectors. demonstrate how a Smart Clean Energy Package that includes renewable energy and artificial } According to the North Dakota Department of intelligence can add value, cost-effectively attract Commerce, 600 housing units were weatherized tenants, and enhance economic development while in North Dakota in 2017. Homeowners achieve making efficient use of the utility grid in a public- an average of 7-18 percent lower energy costs private partnership. A guide will be developed for (about $283/year). Clients can expect savings of developers and cities on how to cost-effectively over $4,000 during the lifetime of the measures include such a package in the design of future installed. Additional health benefits bring the total new construction or remodels to further enhance savings to over $13,000. economic development. The project will involve on- site solar, battery storage, electric vehicle charging, } North Dakota Department of Commerce and intelligent control at the Roberts Common administers the Energy Conservation Grants, mixed-use facility (city parking ramp with a private which is funded by one-half of 1 percent of the oil residential and commercial wrap) to optimize the extraction tax deposited in the Resources Trust Fund use of renewable energy while minimizing the up to $200,000 for the current biennium. Grants impact on the utility grid. Meters and sub-meters can be used for energy efficiency projects in public will be used to consider managing the impact of buildings. To date, 68 completed projects have renewables and EV charging on an efficient and received funding, at an average project cost of reliable use of the grid. $33,265.

} According to Auto Alliance, North Dakota’s ranking of electrical vehicle sales for 2016 was 48th in the nation with .04 percent of the market. While electric vehicles are not commonplace in Sources: North Dakota Department of Commerce, U.S. North Dakota, there are 47 public charging stations Green Building Council, North Dakota Geological Survey, around the state. eFargo, PlugShare.com, Auto Alliance

32 Spotlight on North Dakota Energy NORTH DAKOTA TAXES

} According to the Office of State Tax Commissioner, } The Legacy Fund was established in 2010 as the North Dakota is again on the path of modest, steady state’s “nest-egg” and is funded by 30 percent of growth. Oil prices have risen to a sustainable, the state oil and gas production taxes. At the end of profitable level around $50 per barrel, adequate to January 2019, the Legacy Fund had received $4.91 support an all-time record production level in the billion in deposits. Interest earnings from the Legacy month of December 2018. Unemployment rates Fund will be transferred to the State General Fund throughout the state – especially its metro areas – beginning in the 2017-19 biennium, with the first remain very low with ample available jobs. Taxable transfer expected June 30, 2019. Legislators can sales and purchases for the first three quarters of spend the principal of the fund with a two-thirds 2018 were up 13 percent over the same period in majority vote in each house. There is an additional 2017. Income tax collections – both individual and limitation restricting any expenditure of Legacy corporate – continue to exceed expectations pointing Fund principal to a maximum of 15 percent in any to strong employment and a healthy business biennium. climate. Sources: North Dakota Tax Department, North Dakota Office of Management and Budget

NORTH DAKOTA JOBS

} The North Dakota Department of Mineral the 17 oil and gas producing counties. The 17 oil Resources estimates that, depending on the price of and gas producing counties saw a 12.3 percent oil, an additional 40,000-45,000 wells will be drilled decrease in total job openings over the year and a over the next 30 years or so. The state could see a 28 percent decrease over the past five years. peak of about 87,000 oil-related jobs near 2030, with about 70,000 of those jobs being long term. Sources: Job Service North Dakota, North Dakota Department of Mineral Resources } Job Service North Dakota (JSND) data (Quarterly Census of Employment & Wages 2017) shows that in 2017 an estimated 22,870 workers were in direct or support positions for the industries of oil and gas extraction, coal mining, utilities, and pipeline transportation, with an estimated annual wage of approximately $101,703. These statistics do not reflect employment or wages in ancillary businesses or industries working in the energy field, such as trucking, construction, engineering, manufacturing, and repair services.

} There continue to be numerous job opportunities in the state. Data from JSND’s Online Job Openings Report showed a total of 14,001 openings in February 2019. The two occupational groups most closely associated with opportunities in the oil patch (Construction & Extraction and + Clyde Moche, an operator at the Lonesome Creek Station Transportation & Material Moving) accounted for near Watford City, N.D., is shown next to the natural 1,857 of those openings statewide. These figures gas fired turbine of one of the plant’s five, 45-megawatt reflect a year-over-year increase in total openings capacity generating units. The plant is owned by Basin across the state and a year-over-year decrease in Electric Power Cooperative, Bismarck, N.D. Photo courtesy of Basin Electric.

www.energynd.com 33 + Dan Brouillette, Deputy Secretary of the U.S. Department of Energy, visits with employees of Great River Energy taking part in control room operation training at Bismarck State College. The BSC National Energy Center of Excellence houses a training simulator for the Coal Creek Station. Photo courtesy of Bismarck State College National Energy Center of Excellence.

EDUCATION / WORKFORCE TRAINING

} Energy Hawks is a premier research program incumbent employees the necessary skill-sets to for students to better understand North Dakota’s become the future leaders in supervision and current energy landscape and focuses that management roles within their organization. understanding on future energy challenges and opportunities. Established in 2018, the University of § Approximately 800 students are enrolled in North Dakota Energy Hawks is a group of graduate a BSC energy program either on campus or and undergraduate students from a wide range online every semester, utilizing world-class lab of disciplines focused on adding value to North equipment, online simulations and animations, Dakota’s energy industry through a broad range and real-time lab sessions. of concepts. Through research, interviews, and § In 2018, 326 students earned a degree or travel in North Dakota, these students study the certificate in one of the BSC NECE programs. opportunities and challenges of the energy industry and develop a series of initiatives for further § Of those graduates that replied to a BSC research and consideration. Career Services survey, 98 percent were continuing their education or were employed. } The Bismarck State College (BSC) National Energy Recent graduates who were employed reported Center of Excellence (NECE) has been training the salaries ranging from $20-$40 or more per current and future workforce for the energy industry hour. since 1970. With twelve program areas offering degree or certificate options, BSC provides expertise § BSC’s NECE also provides customized training in facility operations and technician (instrument, for regional and national energy companies to mechanical, energy services) roles across the maintain certification/training requirements, industry. These include traditional and renewable educate new hires and to supplement existing power generation facilities, electrical transmission, training programs. distribution, linework, system operations, petroleum production, oil and gas processing and refining § In FY 2018, BSC provided non-credit training facilities, and water and wastewater technology. to 795 individuals representing 99 unique In addition, BSC’s Bachelor of Applied Science companies and hosted 207 training events. degree in Energy Management focuses on providing

34 Spotlight on North Dakota Energy } The Harold Hamm School of Geology and } Bismarck State College, Williston State College, Geological Engineering at the University of North Lake Region State College and North Dakota State Dakota provides education and research in College of Science are partners in TrainND, which petroleum geology and related fields. works with businesses to provide tailored training programs in a variety of energy fields, including oil } Lake Region State College in Devils Lake offers a and gas operations, lease operators, well servicing, wind energy technician program that utilizes a 1.6 wind energy, welding, and more. MW wind turbine near campus. } The Energy & Environmental Research Center } North Dakota State University in Fargo offers (EERC), located at the University of North Dakota a number of programs in engineering, geology, in Grand Forks, is a world leader in providing agriculture and other degrees that prepare students solutions to energy and environmental challenges. for career paths in many fields, including energy. The EERC has a multidisciplinary team of 200 Other state higher education institutions, including highly skilled engineers, scientists, and support Williston State College, Minot State University personnel. The EERC employs and mentors students and the North Dakota State College of Science at in many disciplines. Its core priorities include coal Wahpeton, provide a variety of degree programs utilization, carbon dioxide management, oil and that prepare graduates for careers in energy fields. gas, alternative fuels and renewable energy, and energy–water management.

} Via a partnership between the energy industry, the North Dakota Industrial Commission, the State Historical Society of North Dakota, and the Great Plains Energy Corridor at BSC, energy curriculum was added to the 4th and 8th grade North Dakota Studies courses. The two-week curriculum offers photos, videos, maps, and animations related to North Dakota’s energy resources and is available online at www.ndstudies.gov.

Sources: Bismarck State College, University of North Dakota Energy & Environmental Research Center

+ ENERGY: Powered by North Dakota provides 4th and 8th grade energy curriculum for North Dakota students. + Students in the Bismarck State College Instrumentation & Control program set up and calibrate a valve as part of a lab activity. Photo courtesy of Bismarck State College National Energy Center of Excellence.

www.energynd.com 35 NORTH DAKOTA’S ENERGY RANKINGS IN THE US

Crude Oil # Production 2 Bismarck State College Wind # National Energy Center Production 5 of Excellence PO Box 5587 Bismarck, ND 58506-5587 Total Energy Production # (701) 224-2445 6 [email protected] energynd.com Coal # Production 9

Ethanol Production # ACKNOWLEDGMENT AND DISCLAIMER 10 This material is based upon work supported in part by the Office of Energy Efficiency and Renewable Energy (EERE), U.S. Department of Energy, under Award Number DE-EE0007482, and funded in part by the North Dakota Natural Gas Department of Commerce Office of Renewable Energy and Energy Efficiency. # Production 11 This report was prepared as an account of work supported in part by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express Total Net Electricity or implied, or assumes any legal liability or responsibility for the accuracy, # completeness, or usefulness of any information, apparatus, product, or process Generation disclosed, or represents that its use would not infringe privately owned rights. 35 Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily Sources: U.S. Energy Information Administration, American Wind Energy Association, Renewable Fuels Association constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. ABBREVIATIONS: BTU - British Thermal Unit kV - Kilovolt kW - Kilowatt kWh - Kilowatt-hour MW - Megawatt MWh - Megawatt-hour

On the cover: A Marion 8750 dragline – Chief Ironside – used by Falkirk Mine has a bucket with a capacity to hold 125 cubic yards of overburden. The bucket can hold four full-size pickups. Falkirk Mine produces about eight million tons of lignite coal annually and is one of the safest mine operations in the coal industry. The mine employs about 430 people full time. Photo courtesy of North American Coal.