April 8, 2014

State looks to capture more natural gas

By Kate Ruggles
Farmer Staff Writer

Flaring has been a difficult issue for the state of North Dakota to deal with, according to Alison Ritter, Public Information officer for the North Dakota Department of Mineral Resources. Solving the issue during the current oil boom has been complicated and involved. But that will hopefully soon change due to the efforts of both the North Dakota Flaring Task Force and an upcoming hearing regarding the North Dakota Industrial Commission’s newly-adopted policy on reducing gas flaring.
Since a third oil-production surge began in 2010, the state has been flaring natural gas at a rate of roughly 30 percent. The only exception to that statistic has been in recent months when the closure of the Tioga Gas Plant has caused the state flaring rate to rise to around 36 percent. The state not only deems these percentage rates unacceptable, but also wasteful.
“Part of our mission is an effort to reduce waste,” states Ritter. “And flared natural gas is a wasted resource.”
Recently, the state Industrial Commission adopted a goal of capturing 90 to 95 percent of the natural gas that is produced in North Dakota by 2020, therefore flaring a maximum of five to 10 percent of the natural gas that is produced during oil production.
The problem according to Ritter, is that reducing waste is only one part of the Industrial Commission’s mission. And sometimes, the different aspects of what the Industrial Commission sets out to do are in contrast to one another.
“You cannot have gas production without oil production. And the Industrial Commission has to look out for the rights of both industries, along with protecting the rights of mineral owners,” states Ritter. “We have to promote production, protect rights, and prevent waste. It is a delicate balance and we have to try to satisfy everyone without causing damage to one entity over another.”
Some of the hindrances to natural gas capture have been the lack of gathering system infrastructure and the commission’s desire to not restrict oil production.
“It is such a double-edged sword,” states Ritter. “We don’t want to damage the economics of the well. But we also need a well to produce at its maximum field capacity in order to know what type of pipeline should be put in place for natural gas capture. In order for a well to produce at maximum field capacity, without being attached to a gathering system, there has to be some flaring.”
Additionally, in some cases there are still no gathering systems for the new well to be hooked into. And in other cases, if there is a gathering system, the pressure station may not be large enough to handle the amount of oil the well produces. This is especially the case in northeastern McKenzie County where the initial production of some Three Forks Formation wells have an initial production rate of 5,000 barrels of oil per day.
“There is also a limited construction season in North Dakota, which makes it difficult to put gathering systems in place,” states Ritter.
According to Ritter, huge strides have already been made toward flaring reduction with the establishment of the Flaring Task Force.
“Many people think that because you have to have oil production in order to produce natural gas, that they are the same industry and reducing flaring should be simple,” states Ritter. “That is a misconception. They are two separate industries, and things like confidentiality agreements and right-of-way issues can work against solving the problem of flaring.”
Ritter states that the coming together of oil and natural gas industry leaders was a huge step toward working together to reduce flaring across the state.
But in order to achieve 90 to 95 percent capture by 2020, Ritter states that something more has to happen, which is why the Industrial Commission has scheduled this hearing.
The special hearing to address the North Dakota Industrial Commission’s newly-adopted policy on reducing gas flaring is scheduled for Tuesday, April 22 at 9 a.m. at the commission’s office in Bismarck.
The commission will consider amending field rules relating to the Bakken and Three Forks pool that restrict oil production and consider any additional steps to reduce gas flaring.
The commission is seeking input on the following:
• The length of time wells should be allowed to produce at maximum while flaring;
• Appropriate production rate restrictions for wells connected to gas gathering or beneficial uses;
• Appropriate types of administrative approval of exemptions from production restrictions;
• What consideration should be given to ambient air quality regarding production rates or restrictions;
• Should production rates and restrictions be adjusted for well economics and percentage of gas captured by well site, field-pool, region or operator;
• Should production rates for wells not connected to gas gathering or beneficial uses be reduced in stages or set at a low rate after payout?
Ritter states that it is difficult to know how much production could be affected by the commission’s new flaring policies, which is what makes the testimony they receive at the hearing so important.
“Through the hearing, we hope to be able to mold policy around the information we receive,” states Ritter. “So, if we do have to impose production restrictions in order to reduce flaring, then we are doing it in the right way, based on the testimony we received.”
The commission requests that those who testify at the hearing be prepared to supply testimony of a technical nature. Written comments may be submitted to brkadrmas@nd.gov no later than 5 p.m., on Monday, April 21.