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.