Gas processing company operates in N.D. oil patch

PALERMO A gas processing business operating in the oil patch is looking ahead to continued growth in North Dakota.

Aux Sable Midstream purchased the Palermo Conditioning Plant and the Prairie Rose Pipeline from EOG Resources Inc. two years ago.

“North Dakota is a very big step in our growth process and we see ourselves growing in this area,” said Chuck Kane, of Tulsa, Okla., manager of Bakken Development for Aux Sable Midstream.

Kane spoke at the May 23 meeting of the Minot Area Chamber of Commerce’s Energy Committee, held in the Vegas Motel in Minot.

The Palermo Conditioning Plant is located about 1 1/2 miles south of U.S. Highway 2 near Palermo.

Most recently, Kane said Aux Sable built a new administrative building at the site. “It’s a state-of-the-art building,” he said. He said the new building has plenty of room for expansion and growth.

Aux Sable has its headquarters in Channahon, Ill., and a business development office in Tulsa.

On the U.S. side, Aux Sable Liquid Products and Aux Sable Midstream are owned by three companies: Enbridge, Veresen and Williams Partners.

Aux Sable also operates in Canada and includes the Septimus Gas Plant at Fort St. John, British Columbia, and the Heartland Off-Gas Plant at Fort Saskatchewan, Alberta. In Canada, Aux Sable is owned by Enbridge and Veresen.

Aux Sable has been in business since 2000, Kane said.

The company derived its corporate name from the township where it located the Channahon NGL (natural gas liquids) extraction and fractionation facility in 1996 as part of the Alliance project, according to the Aux Sable website. Aux Sable Township itself was named by the original French Canadian settlers who traveled to and from the sand bar on the local creek to access water… “aux sable” means “to the sand” in French.

The facility at Channahon, owned and operated by Aux Sable Liquid Products, is one of the largest NGL extraction and fractionation plants in North America.

Aux Sable Midstream acquired the Palermo Conditioning Plant and the Prairie Rose Pipeline in July 2011.

The Prairie Rose Pipeline connects the Palermo Conditioning Plant to the Alliance Pipeline, which delivers high energy dense phase gas to Aux Sable’s Channahon plant for NGL extraction and processing.

The Palermo plant receives gas from four gas gathering systems servicing nearby Bakken shale oil/gas production areas. The plant removes the heavier hydrocarbon compounds while leaving the majority of the natural gas liquids in the rich gas delivered into the Prairie Rose Pipeline.

Aux Sable Midstream constructed a NGL-mix truck unloading facility at the Palermo plant that began operation in 2012.

The Palermo plant currently employs about 30 people.

Aux Sable Midstream is pursuing other NGL processing and infrastructure midstream initiatives, primarily driven by the shale oil and shale gas developments in the Midwest and northeast United States, according to company officials.

Kane said it is very important to the company to have good working relationships with landowners, governments anyone who is a stakeholder.

He said Aux Sable is committed to helping reduce the flaring of gas and is working with producers to capture flared gas.

He noted that House Bill 1134 was passed by the North Dakota Legislature earlier this year.

Gov. Jack Dalrymple signed the bill into law in April. It amends the state’s flaring and oil and gas production tax statutes to promote reduction of natural gas flaring at oil and gas wells in North Dakota.

“There’s a lot being flared,” Kane said. He said about a third of the gas right now that is being produced from the wells is being flared.

“Our goal is to optimize the value of the gas because that gas being flared does not bring revenue to companies or to the state,” he said.

Kane told the Energy Committee members that North Dakota has a very good business climate. “North Dakota is a very good state to do business. You should be proud of that,” he said.

During Aux Sable’s years of operation, Kane said the company has received numerous awards. “We’re very proud of our very safe, reliable operations,” he said.

The company in the Chicago area was voted, through the Chicago Tribune, for three consecutive years 2010-2012 as one of the top 100 smaller business companies, or companies with fewer than 500 employees.

Kane said Aux Sable has programs to work with communities based on needs and demands. In Minot, he said, the company donated $50,000 to the Minot Flood Recovery Fund.

“We can see a lot of growth here, there’s a lot of opportunities here, and our key asset (the Palermo plant) is just down the road,” Kane told the Minot group.