Hess Midstream LP plans to move an average 100,000 barrels per day of crude oil and process around 350 MMcf/d of natural gas in 2023 in the Bakken Shale, spending nearly $225 million in the year to accommodate growing production, senior company officials said.

The average crude oil gathering volume in 2023 is expected to be in a range of 95,000 b/d to 105,000 b/d. Crude oil terminaling volumes were targeted to be 105,000-115,000 b/d, President and COO John Gatling said in a Jan. 25 conference call to discuss fourth-quarter 2022 earnings. Crude terminaling includes pipeline and rail shipment and storage.

Natural gas gathering and processing in the Bakken is expected to average 365 MMcf/d to 375 MMcf/d and 350 MMcf/d to 360 MMcf/d, respectively, Gatling said.

Hess Midstream plans to focus 2023 capital expenditures on expanding its gas compression capacity and its gathering systems. Nearly 45% of its planned spending, or $100 million, will go toward fabricating and installing two new greenfield compressor stations and associated pipelines with a capacity of 100 MMcf/d, the company said in a statement.

The midstream company owns infrastructure facilities to handle crude oil and natural gas in the Bakken and Three Forks shale plays in the Williston Basin of North Dakota, with its main shipper being parent Hess Corp. Its prime facilities include the Johnson's Corner Header crude oil pipeline gathering network system with a nameplate capacity of 100,000 b/d and the Tioga and Ramberg rail and storage facilities in North Dakota. It also owns natural gas handling and processing facilities at Tioga, Hawkeye and Little Missouri 4.

The growth in gas processing and gathering volumes is expected to increase net income and adjusted EBITDA by 10% per year in each of 2024 and 2025, Hess Midstream said. As a result, the company extended its annual distribution per share growth target of 5% through 2025.

Hess Midstream reported net income of $149.8 million for the fourth quarter, compared with $165.1 million for the same period a year ago. After deduction for noncontrolling interests, the net income attributable to Hess Midstream was $21.8 million, or 49 cents per share, compared with $16.9 million, or 51 cents per share, in the year-ago quarter. Adjusted EBITDA was $245.1 million.

Total crude gathering stood at 93,000 b/d for the quarter, some 12% less than the 106,000 b/d in the same quarter of 2021. Crude terminaling in the quarter averaged 101,000 b/d, compared with 113,000 b/d in the same quarter the previous year.

Gas gathering was 328 MMcf/d, compared with 345 MMcf/d in the last quarter of 2021. Gas processing was down 5% to 312 MMcf/d in the quarter compared with 330 MMcf/d in the same quarter the previous year.

Gatling attributed the declines in part to abnormally cold weather and excess snow in December that affected midstream operations.

Midstream options

Hess Midstream has oil marketing options that include flowing the Bakken crude to the Dakota Access Pipeline, Enbridge Inc.'s Mainline, rail and even trucking, said Justin Kringstad, a director with the North Dakota Pipeline Authority.

"Crude oil egress out of the Bakken looks healthy, but most concerning is the need to move associated natural gas and [natural gas liquids], and this may impact crude oil production going forward," Kringstad said. Current takeaway capacity from the Bakken now stands at some 1.6 million b/d while production is forecast to grow annually at 40,000 b/d to 80,000 b/d, Kringstad said.

Plans of the parent

For the current year, Hess Corp. plans to operate four rigs at its acreage in Bakken, targeting to bring 110 new wells online in 2023 and 2024 and grow production to 200,000 b/d of oil equivalent in 2025, Gatling said.

Total output in the third quarter by Hess Corp. was 158,000 barrels of oil equivalent per day and at a WTI price of $60/barrel, the upstream producer will target a 9% increase in the average 2023 production to 165,000 boe/d to 170,000 boe/d, he said.

"The 200,000 boe/d production will be an anchor point for growth in the coming years [in the Bakken]," Gatling said, without indicating a specific timeline.

Hess Corp. reported net income for the quarter of $624 million, or $2.03 per common share, compared with net income of $265 million, or 85 cents per common share, in the fourth quarter of 2021.

S&P Global Commodity Insights reporter Ashok Dutta produces content for distribution on Platts Dimensions Pro.