North Dakota's Efforts to Curb Flaring Stymied by Feds | Russell T. Rudy Energy LLC
North Dakota’s Bakken shale has become a poster child for the shale revolution. With production that has increased from 321,000 barrels of oil per day (bopd) in 2010 to the current level of 1.1 million it is a stellar example of what technology, innovation and free enterprise can accomplish. Unfortunately, this progress has been marred by excessive flaring of natural gas associated with the oil which is produced. Worldwide, 3% of gas is flared, and in the U. S., less than 1 %. Initially 36% of gas was flared in the Bakken area and that has been steadily decreasing to its current level of 26%.
Obviously, a lot more remains to be done and the industry, as well as state regulators, is committed to making it happen. In order to do this, gathering lines from well sites and field treatment facilities are needed to take natural gas to processing plants. From there, gas transmission lines are needed to take processed gas to markets. The construction of these pipelines and plants is delayed by lengthy federal reviews according to a recent article in “Rigzone”.
The cost of delays associated with approvals is more flaring and less growth in oil production. At current rates North Dakota flares enough gas in a month to heat more than 160,000 homes for a year. New state regulations mandate further reductions in flaring which will come into effect next January. Operators who do not meet the new standards will see their allowable production rates on new wells cut back from 1,500 bopd to only 200. Reductions such as these would dramatically affect the economics of new wells and other investments.
Unfortunately, oil and gas operators are caught between the hammer of state agencies who want to reducing flaring, and a variety of federal entities with a range of different priorities. Hess Corp.’s new Tioga gas processing plant is only running at 70% of capacity because a key pipeline had to be rerouted 8 miles around an Indian historical site. Hess is working with the U. S. Bureau of Land Management and 9 other agencies to resolve this problem expeditiously.
Oneok just announced plans to build its eleventh natural gas processing plant in the state, but cannot complete a 1.6 mile portion of a pipeline to its Garden Creek facility because it cannot get approval from the U. S. Forest Service and three Indian tribes. Approvals are not expected until November at the earliest, which means Oneok will miss the construction season due to the severe winters in North Dakota. Consequently construction will be delayed until next April.
While operators are committed to complying with all applicable regulations, the cost of doing so in terms of time, money, continued flaring, and production can be extremely high.
To read the article in its entirety, please go to www.rigzone.com/news/oil_gas/a/135263/Maze .
