The heat is on when it comes to reducing the flaring of natural gas in the Bakken. Mineral owners, policy makers and many oil-field companies are encouraging more action to curb the need to burn off a valuable energy resource.
The North Dakota Petroleum Council members formed a task force in October to spearhead the industry's efforts to significantly reduce the flaring of natural gas in the Bakken oil field.
The North Dakota Oil & Gas Division reports 71 percent of gas already is captured. The remaining 29 percent is a decline from an historic high of 36 percent in September 2011. However, with increased oil drilling, the volume of natural gas flared has actually increased by more than 50 percent since September 2011, reaching 266,000 million cubic feet per day, according to a study by Ceres, a Boston nonprofit.
Natural gas is flared from a well in western North Dakota in this photo from the North Dakota Department of Mineral Resources.
The industry has invested more than $6 billion in new pipelines, processing plants and other infrastructure to move natural gas from the wellhead to the marketplace, according to the petroleum council.
Gov. Jack Dalrymple and Alliance Pipeline officials on Oct. 29 announced the completion of the 80-mile Tioga Lateral Pipeline, which is considered to be another piece of the solution to natural gas flaring. The $170 million pipeline will move natural gas from Hess Corp.'s gas-processing plant near Tioga to a fractionation facility in Illinois and other markets. Alliance plans to contract with other producers to maximize the pipeline's capacity to ship about 126 million cubic feet of natural gas per day.
Since 2007, gas plant capacity has increased by 340 percent from 227 million cubic feet per day to more than 1 billion cubic feet per day, the petroleum council reports.
The increase in pipeline and plant capacity hasn't kept up with the production growth being seen in the Bakken because of how rapid that growth has been and the challenges related to developing the natural gas infrastructure, said Terry Kovacevich, petroleum council chairman and regional vice president for Marathon Oil.
"We have to remember that the Bakken is still a very young play, and this is just one factor in why production has outpaced our ability to build the infrastructure needed. Furthermore, the Bakken is unlike any other play in the world and requires solutions specifically tailored to its geology, climate, landscape and resources," Kovacevich said in a statement announcing the formation of the task force.
Tessa Sandstrom, communications manager for the petroleum council, Bismarck, said a company that brought in mobile natural gas plants built for the Texas oil fields soon discovered that the Bakken is different. The plants weren't suitable for the liquid-rich natural gas in the Bakken, so new technology needed to be designed.
The introduction of multi-wells on a pad is another factor affecting the ability to handle the amount of natural gas being produced.
"It's a technology built for one well," Sandstrom said. "The infrastructure now is too small. They either have to go in and replace that pipeline with bigger pipe or put in more, smaller pipes."
North Dakota's short construction season and the sheer size of the Bakken 15,000 square miles are slowing the ability to build infrastructure fast enough. The process of getting easements and private contracts to build pipeline also can take considerable time.
Various companies are experimenting with other ways to reduce flaring. One option is called gas lift, which involves pumping natural gas back into the well to bring up the pressure and produce more oil. Another option already in use on a small scale involves using natural gas to power the rigs, cutting the need for diesel fuel.
Some other technologies that companies are looking at include units that generate electricity to sell back to the grid, vapor recovery units and gas compression at the wellhead to better allow for transportation of the gas.
Meanwhile, a group of attorneys representing mineral owners has filed 10 class action lawsuits in North Dakota seeking damages from oil companies for flaring natural gas in alleged violation of state flaring laws.
"The ultimate goal is simply to require the operators to comply with North Dakota law, and the result of that is the mineral owners are paid royalties on flared gas," said Derrick Braaten with Baumstark Braaten Law Partners in Bismarck. "We are not seeking to stop development or stop the wells from producing."
North Dakota law allows limited flaring during the first year after an oil well enters production if certain oil production limits are followed. After a year, a producer must apply for a written exemption for any future flaring or pay royalties and state taxes on the flared gas. The plaintiffs allege that operators are flaring in excess of production limits during the first year and flaring beyond a year without exemptions and without paying royalties.
The value of natural gas may be insignificant compared to the value of the oil, but if companies are forced to meet their obligation to pay royalties on that flared gas, they will have an incentive to reduce the flaring, Braaten said.
The lawsuits filed in mid-October pertain to wells in Williams, McKenzie and Divide counties. The plaintiffs include Sarah Vogel of Bismarck, who has mineral interests in Mountrail County and is a former partner in Baumstark Braaten and former state agriculture commissioner.
Legislators have introduced incentives to limit flaring, and the state pipeline authority set a goal to limit flaring to no more than 10 percent of produced gas.
Thirteen percent of natural gas is flared because of lack of infrastructure to capture it, and 16 percent is connected to infrastructure but may flare intermittently, according to the Oil & Gas Division. Sandstrom said flaring might be used if the pipeline cannot handle the amount of gas, the processing plant is already full or there is clogging within the pipe.
Members of the petroleum council's task force plan to pool the knowledge and experience of companies operating in the Bakken to identify solutions to reduce flaring. The group also will work to educate the public about the issues. It hopes to have a report with recommendations to deliver to the North Dakota Industrial Commission in December.