MDU Resources unveils $3.5B capital plan focused on utility operations

MDU Resources Group Inc. on Nov. 22 unveiled a plan to make $3.5 billion in capital investments from 2023 to 2027, focused on its electric and natural gas transmission and distribution infrastructure.

The Bismarck, N.D.-headquartered company earmarked a total of $2.55 billion for its regulated energy delivery businesses, of which $1.27 billion is set aside for natural gas distribution, $823 million for its electric segment and $458 million for its pipeline business.

MDU plans to spend $982 million on its construction materials and services businesses, with $804 million earmarked for its construction materials and contracting business and $178 million set aside for its construction services business, it said in a news release.

MDU said its capital plan represents a substantial increase in investments in its utility operations, with a 27% increase compared with the previous five years. The company projects that the growth rate base of its electric and gas utilities will increase approximately 6% to 7% annually from 2023 to 2027 on a compound basis.

The investments include infrastructure upgrades and expansions for MDU's electric and gas utility distribution systems, MDU said. This would include building transmission and substations, as well as power production upgrades and improvements.

The plan also includes the recently announced Jamestown-to-Ellendale 345-kV transmission project in North Dakota. The project is expected to cost $439 million, of which 50%, or $220 million, is expected to be recovered through a Midcontinent ISO rate.

In addition, MDU will move forward with several expansion projects for its pipeline business segment, such as the previously announced Wahpeton Expansion project in North Dakota. The pipeline expansion projects would add more than 300 MMcf/d of incremental gas transportation capacity.

"These capital investments encompass all our businesses while we continue to make progress toward our strategic initiatives of creating two pure-play public companies," said MDU President and CEO David Goodin.

On Nov. 3, MDU announced plans to launch a strategic review to restructure the company into two publicly traded entities: a construction materials company and a pure-play regulated energy delivery company. The company also started a strategic review of its construction services business unit, MDU Construction Services Group Inc.

In August, the company said it was spinning off its construction materials business, Knife River Corp., to unlock "significant shareholder value" and enhance strategic focus on its regulated utilities, natural gas pipelines and related infrastructure services.