North Dakota Flaring Causes Concern
According to a recent article in “Rigzone”, there is growing concern over the number of flares, and the volume of gas being flared in “The Peace Garden State”. The economic benefits of the development of the Bakken/Three Forks shale in North Dakota is well known. However, as new wells are brought on- line, producers, regulators, consumers and land owners are all confronted with the issue of surplus gas.
When a gas well is completed, the gas goes into a gathering system, sent to a processing facility and ultimately to market. The liquid hydrocarbons (crude oil/condensate) which are produced in a gas well are shipped via truck or pipeline (depending on the volume involved) for further processing. However, when an oil well is completed the natural gas associated with the liquids (known as oil well gas or casing head gas) cannot be further processed if a gathering system and facilities are not available. In these cases, operators have no choice but to either vent (release the gas into the atmosphere) or flare (burn the gas with the resulting CO2 released into the atmosphere). Since flaring is safer and less damaging to the environment, it is the preferred solution.
In the early days of the development of the Bakken, flaring was a concern, but not a crisis. However, as development has progressed, flaring has become an increasingly important issue. Historically Texas flared more gas than North Dakota, but since 2011, the trend reversed and since then North Dakota has flared more gas than Texas by an ever widening margin. There are currently about 9,000 wells in North Dakota and the number is projected to reach 50,000 by 2030, so the implications for the future are obvious.
It is estimated that approximately 30% of the gas produced in North Dakota is flared. In 2013 enough gas was flared to meet the energy needs of 1.3 million homes. This represents a loss of about $1.3 billion to operators, land owners and the state’s treasury. In response to the concerns of shareholders, royalty owners, government officials and environmentalists, an industry task force, representing hundreds of companies, was formed to come up with a plan. By developing infrastructure, exploring injection opportunities, and using gas to power equipment at the well site, it is felt that flaring can be virtually eliminated by 2020. Probably even more importantly, the task force believes that the industry can capture and utilize 85% of produced gas within the next two years. Since natural gas production in North Dakota is projected to increase by 40% by the end of 2015, this would truly be a remarkable achievement.
To read the article in its entirety, please go to http://www.rigzone.com/news/oil_gas/a/132092/OG.