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James MacPherson, Associated Press, Published September 17 2013

Companies expand pact to move ND gas to Chicago

BISMARCK — A company in Canada and one in Texas have expanded an agreement to feed liquids-rich natural gas from North Dakota's oil patch into an existing pipeline that moves gas to Chicago.

Calgary-based Aux Sable Midstream LLC and Summit Midstream Partners LP of Dallas said up to 25 million cubic feet of natural gas daily will be sent from Burke and Mountrail counties along a 2,300-mile pipeline system. Alliance Pipeline Ltd.'s pipeline runs from western Canada to the Chicago hub, where the gas is sold to Midwest and East Coast markets. In North Dakota, the pipeline is fed by the Prairie Rose Pipeline owned by Aux Sable.

Summit spokesman Marc Stratton said about 17 million cubic feet of North Dakota natural gas is being shipped at present under an existing pact that has been in place since late 2011. Stratton said work is being done by Summit to bump the gathering capacity of natural gas in western North Dakota to about 30 million cubic feet daily by mid-2014.

The agreement announced by the companies and North Dakota Gov. Jack Dalrymple on Monday can be expanded as the shipping capacity increases.

Financial terms of the agreement were not disclosed.

Dalrymple said in a statement that the deal between the companies helps curb the practice of burning natural gas as an unmarketable product of oil production.

"We continue to work ... to reduce the flaring of this valuable energy resource," Dalrymple said. "This project aligns with our overriding goals."

About 30 percent of the gas produced in North Dakota is burned off as a byproduct of the state's escalating oil production, compared to less than 1 percent in oil fields nationwide. The amount of natural gas that's torched and wasted daily by drillers in North Dakota's oil patch also is costing the state millions of dollars annually in lost revenue.

Natural gas produced from the Bakken and Three Forks formations also is rich in liquids that can be converted into fuels such as butane, propane and methane.

"We're working with producers out there to get more wells off flair," Stratton said. "Flaring is a big issue in North Dakota, and one of our objectives is to gather that commodity and get value for it."

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