BISMARCK, N.D. (AP) -- A slipping supply of a gas used in plastic manufacturing has prompted a Canadian petrochemical factory to pursue stocks from a North Dakota plant. Another Canadian company is proposing a 430-mile-long pipeline to move the ethane north.
Nova Chemicals Corp., Canada's biggest plastics producer, said it signed a long-term agreement to purchase 100 percent of the ethane produced at Hess Corp.'s natural gas plant in Tioga, in northwest North Dakota.
Nova Chemicals also has reached a shipping agreement with Calgary-based Mistral Energy Inc.
Mistral spokesman Gordon Salahor said his company is proposing a $300 million pipeline to move the liquid gas from Tioga to Alberta, and then tie into an existing network that connects to Nova's Joffre manufacturing facility.
Nova Chemicals, a subsidiary of Abu Dhabi investment firm International Petroleum Investment Co., did not disclose financial terms of the agreements.
New York-based Hess is among the biggest players in North Dakota's booming oil patch. The company announced in April that plans a $325 million expansion to its natural gas plant in Tioga. Hess said it wants to increase capacity at the plant from 100 million cubic feet of natural gas daily to 250 million cubic feet. The company said it wants to start construction on the expansion project next March and complete it in late 2012.
Nova spokeswoman Wendy Lomicka said her company, which primarily produces plastics used for food packaging, has seen an 8 percent annual drop in ethane supply from Canadian producers since 2008.
Ethane is colorless and odorless and extracted from raw natural gas. It also is used for welding, and as an anesthetic and an agent for ripening fruit.
Lomicka said the company's factory can use up to 180,000 barrels of ethane daily.
Mistral Energy's proposed Vantage Pipeline would initially supply up to 45,000 barrels of ethane daily to the Joffre facility and could be expanded to transport 60,000 barrels daily.
Salahor said shipping would begin once Hess' plant expansion is completed.
Nova is looking augment traditional Canadian ethane supply sources with those in the Williston Basin, which includes parts of the Dakotas and Montana, the company said.
Justin Kringstad, director of the North Dakota Pipeline Authority, said North Dakota's Bakken shale formation within the Williston Basin has a growing supply of high-quality ethane.
"This works very well for us," he said.
