Facts on Natural Gas and Flaring in North Dakota
What are the Bakken/Three Forks formations?
The Bakken/Three Forks is the largest oil field (in square miles) in the world. It underlies approximately 18,000 square miles of North Dakota and is about the size of the State of West Virginia. The formation has been known about by geologists for decades, but it wasn’t until 2006 when the use of horizontal drilling combined with hydraulically fracturing that the Bakken was considered to be an economic play.
The Bakken/Three Forks formations produce crude oil and associated natural gas. Oil is the primary energy resource contained in Bakken/Three Forks wells and is the principal economic driver for energy producing companies.
What is natural gas flaring?
Flaring of natural gas occurs when natural gas is burned on location due to a lack of gathering pipeline infrastructure or economic alternatives. Flaring of natural gas is a much safer and more environmentally friendly method of handling the natural gas than simply venting into the atmosphere. By flaring the gas, it converts the methane to carbon dioxide (CO2) which reduces greenhouse gases 25-fold.
A gas-gathering pipeline and processing plant must be in place to condition the natural gas for retail use. An economic analysis must be done to determine if it is even feasible to connect a well to an existing pipeline or perhaps to build a new pipeline into an area of ongoing development. Even after the oil and gas well has been connected to a gas-gathering pipeline and processing facility, there are still times when the well may flare intermittently, generally due to excessive line pressures or mechanical problems.
How much natural gas is produced and flared?
In December 2012, North Dakota produced roughly 25 billion cubic feet of natural gas. That month, 71% of North Dakota’s natural gas was captured and sold to consumers, while 29% of the natural gas was flared due to a lack of pipelines or space on existing pipelines. According to the most recent data available from the U.S. Energy Information Administration and World Bank, North Dakota accounted for 27.6 percent of total U.S. flaring and only 1 percent of world flaring.
Why is Bakken/Three Forks natural gas being flared?
Oil, which is the principal economic driver for energy producing companies in the Bakken, cannot be produced without natural gas. The ND Oil and Gas Division must promote production while preventing waste, so oil production cannot stop entirely. However, production restrictions can be placed on operators (see regulations below). Secondly, the size of the young oil field greatly exceeds the amount of gathering infrastructure in place. North Dakota is rural and remote, and the natural gas industry must continue to build infrastructure and processing facilities to keep pace with production. Third, appropriate gathering pipelines cannot be built prior to well completion. Testing wells must be allowed to flare to evaluate the resource size and the size of the pipeline needed. Fourth, North Dakota has harsh winters and a limited construction season.
Who regulates flaring of natural gas?
In an effort to conserve this resource and protect against waste, the Industrial Commission Oil and Gas Division, under the authority granted in section 38-08-04 of the North Dakota Century Code, implements and enforces rules and regulations to limit the production of oil produced from wells that are not yet connected to a gas-gathering system. Typically, wells are allowed to produce at a maximum efficient rate (MER) for a period of time (generally 30-60 days) in order to evaluate the potential of the well and stabilize the production. After such time, the well production is then restricted to 200 barrels of oil per day (bopd) for another 30-60 days, then 150 bopd for an additional 30-60 days, and finally 100 bopd until the well is connected to a gas-gathering system Further extensions may be granted provided certain conditions are met.
If an oil company determines that it is not economically feasible to build a new pipeline or connect to an existing gathering system, the company may make application to the Industrial Commission Oil and Gas Division seeking relief from paying taxes and royalties on flared gas. State law, under section 38-08-06.4 of the North Dakota Century Code, grants an exemption from payment of taxes and royalties to all new wells for one year from the date of completion. After one year the well must be connected to a gas-gathering system, granted an exemption from the Industrial Commission Oil and Gas Division, or pay taxes and royalties on the flared gas. Link Oil & Gas Division Rules
What makes Bakken/Three Forks gas unique?
Natural gas produced from the Bakken/Three Forks is very rich in natural gas liquids (NGLs). One thousand cubic feet of raw natural gas from a Bakken/Three Forks well may contain around eight to twelve gallons of NGLs. These NGLs (ethane, propane, butane, and natural gasoline) are very valuable and add additional economic incentive for the industry to capture the wellhead natural gas as soon as possible.
Why is natural gas transportation different than oil?
Unlike oil, natural gas produced from the wellhead cannot be gathered by trucks on a large scale and must be moved by pipelines. Recently, some companies have used trucking operations to move natural gas from the wellhead to gas processing plants; however, the large scale availability of trucking technology is still many years away.
What is industry doing to capture natural gas?
Normally separate from the exploration and production industry, the natural gas gathering and processing industry is working as quickly as possible to connect recently drilled wells and expand existing pipeline networks for future development. There are currently eighteen gas processing plants and thousands of miles of gathering pipelines handling North Dakota natural gas. Six new or expanding gas processing plants are under construction in North Dakota and will be placed into service over the next several years. More than $4 billion has either been expended or committed by industry for building gas processing plants and gas gathering infrastructure to service growing production in western North Dakota. ND Gas Plant Information
What is the state doing to promote the capture of natural gas?
First, the Oil and Gas Research Council was founded by the legislature in 2003 to encourage the growth of the oil and gas industry through research and education. The Oil and Gas Research Council has devoted nearly $3 million dollars in grant money toward three research projects specifically aimed at utilizing natural gas in areas that might not otherwise be able to capture this energy. After additional outside grants and industry investment, the total costs of the projects themselves will total nearly $14.5 million dollars.
Second, North Dakota’s Pipeline Authority was established by the Legislature in 2007. The Authority was created for the purpose of diversifying and expanding the North Dakota economy by facilitating development of pipeline facilities to support the production, transportation, and utilization of North Dakota energy-related commodities. Both of these agencies, as well as the Department of Mineral Resources’ Oil and Gas Division are overseen by the Industrial Commission.
What are alternatives to flaring?
Several companies are developing technologies aimed at providing alternatives to natural gas flaring. Some of the key technologies include:
• Onsite natural gas fired electrical generation
• Fertilizer production from wellhead natural gas
• Trucking of natural gas within North Dakota
• Conversion of natural gas to liquid fuel
• Small scale, onsite processing of the natural gas
Visit http://northdakotapipelines.com/webinars/ to watch a webinar about alternatives to flaring.
What are the expectations going forward?
The ultimate goal is to reduce flaring percentages to between five and ten percent over the next decade. The oil and natural gas industries continually make the necessary investments (Over $4 billion to date) and improvements in infrastructure in order to utilize this precious natural resource.