It’s unlikely that pipeline projects receive much media attention while they’re being developed. Much of the work done on these pipelines develops slowly over time and is typically measured by updates on construction as opposed to milestones; therefore, it doesn’t usually gain widespread recognition outside of the local area(s) that they provide service to. Nevertheless, each decision made during the course of developing these projects determines how energy is transported throughout the entire marketplace.
A system evolving to meet changing transportation needs
Kinder Morgan is continuing to develop conversion plans for the Hiland Express pipeline system. A key component of the project is to modify existing infrastructure to fit the current demand pattern. While Kinder Morgan could have built an entirely new pipeline, the company is choosing to use the existing infrastructure, and that is reflective of the strategic and practical aspects of their approach.
Historically, the Hiland Express pipeline system was used to carry crude oil from production areas in the Bakken. However, with the shift in crude oil production volume and marketplace demand across the region, Kinder Morgan is converting the pipeline to allow the transportation of natural gas liquids (NGLs).
Currently, there is no intention to expand for the sake of expanding; however, the primary goal of the conversion work is to transform the way that the infrastructure operates to continue to remain relevant and efficient in the ever-changing energy landscape.
What conversion work entails in terms of actual implementation
There is a common misconception about pipeline conversion, and that is that all that is needed is to change the designation. In reality, conversion of a pipeline requires a number of technical and operational processes to take place before the pipeline can begin to transport the new product or products. These processes include, but are not limited to, modification of pumping and compression equipment, alteration of control systems, obtaining regulatory approval to support the new service, etc.
In the case of Kinder Morgan and the Hiland Express, this conversion work is taking place in phases. This allows Kinder Morgan to manage their risks while simultaneously maintaining safe operations and the continued integrity of the system. The phase-by-phase approach to the conversion work is also allowing Kinder Morgan to minimize disruption to the surrounding community and avoid significant additional land disturbance.
Although the specifics of the conversion work do not normally attract the public’s eye, they are critical components of ensuring that the converted pipeline will operate safely and reliably under different product specifications and flow characteristics.
Why this project is important beyond the pipeline
The importance of the Hiland Express conversion extends far beyond the individual pipeline itself. For instance, in states such as North Dakota and Montana, the production profiles have changed significantly. Natural gas and associated liquids are playing an increasing role in addition to crude oil.
The conversion of the Hiland Express pipeline into a means of transporting additional natural gas liquids will allow producers who seek reliable takeaway options and contribute to a more balanced midstream network. Additionally, the project demonstrates the ability to adapt existing infrastructure to meet new demands without the necessity of building something from the ground up.
Furthermore, for Kinder Morgan, this project exemplifies a greater emphasis on asset optimization, where the company utilizes the flexibility and scalability of their existing assets to respond to changes in the marketplace, rather than simply relying on new construction.
An evolutionary process with lasting implications
While the conversion work on the Hiland Express system may seem incremental in nature, the implications of the conversion are long-lasting. When the conversion work on the pipeline is completed, the role of the pipeline within the regional energy system will be dramatically altered, affecting how products will be moved and ultimately, the planning of future investments. These types of changes rarely occur overnight.
