North Dakota oil producers and stakeholders lost $230 million in revenue last year, translating to $19 million in lost tax revenue to the state, because of insufficient pipeline capacity, experts say.

But this isn't news. The state's pipeline constraints are an age-old problem, one companies are hesitant to invest in; understandably, being that even the design and permit stage of building a pipeline costs millions of dollars and takes years to complete. Now, North Dakota is facing its highest production levels in 20 years, at 120,000 barrels a day, surpassing Kansas as the eighth-largest oil-producing state in the nation. Coupled with 100,000 barrels a day from oil production in the Montana part of the Williston Basin, producers have been facing bottlenecks in several areas of pipeline in the state.

While it's generally understood that there is no quick fix to the problem, the 2007 Legislature took a step in the direction of organizing the issues relating to pipelines by authorizing the North Dakota Pipeline Authority.

And in May, Mark Makelky took on the challenge of being the newborn authority's first director.

"They thought I had something to bring to the table,"Makelky said of his new position.

Indeed. Makelky was the project manager on the Grasslands Pipeline, a 250-mile high-pressure natural gas pipeline from Gillette, Wyo., to Killdeer. From that project alone, Makelky was able to face and realize the breadth of challenges involved in building any sort of pipeline.

"We spent over three years and millions of dollars on the project before we had any tangible things to show for it,"Makelky said. "It took three years to permit it, and three months to build it."

Makelky, raised in Minot and a graduate of the University of North Dakota, worked for more than 30 years with MDUResources Group, mainly involved in design, construction and operation of natural gas production and pipeline facilities.

"He has the knowledge that few in the state have about pipelines," said Ron Ness, president of the North Dakota Petroleum Council.

But in fall 2006, MDUResources began to sell off Centennial Energy Resources, the subsidiary for which Makelky was a project manager. He was one of the first to be let go, ending his employment with MDU Resources on Jan. 19.

Having seen the end coming, however, Makelky began watching a movement in the Industrial Commission and the Legislature that seemed intent on creating a state pipeline authority. In early fall, before the session even began and far before the authority was officially created, Makelky sent a letter to the Industrial Commission about his interest.

And, like any good applicant, he called Lynn Helms, director of the state Industrial Commission's mineral resources department, and explained his interest in the position.

The bill, HB1128, passed with flying colors and went into effect in May. Makelky was called in May to visit with a committee, whose members, as he said, thought he fit the bill.

"It sounded like it would be a facilitative role, but most importantly, they wanted someone to focus on all of these problems full time,"Makelky said.

Because truly, people had taken notice of the problems and worked to help solve them. One of Makelky's roles is bring all of that together, as well as act as a mediator between companies that have similar goals, but remain competitive and unwilling to work together.

"The capacity problem really was the driver to cause people to stand up and take notice,"Makelky said.

As far as capacity goes, Enbridge Energy Partners, L.P., has recently announced plans to expand its pipeline system by 45,000 barrels a day by late 2009, which will take its total capacity to 155,000 barrels a day.

So far, Makelky said, he's still on a steep learning curve. He's met with about 18 companies, and 30 to 40 individuals with stakes in oil production and pipeline capacity.

"One of Mark's goals is to really try and identify the situation related to all of those segments of the industries, and deliver a white paper on each of those issues,"Ness said. "To identify problems and potential solutions."

He is not a permitting agency, or even a state agency; Makelky is contracted by the state to gather information, develop a plan of action and meet with the major players.

When asked where he wants to be in six months, or even a year, Makelky responded:"Well, we'll see in six months."

(Reach reporter Crystal Reid at 250-8261 or at crystal.reid@;bismarcktribune.com.)