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PN Bakken: NDís gas woes
Petroleum News ^ | Week of December 02, 2012 | Ray Tyson

Posted on 12/05/2012 6:12:46 AM PST by thackney

Finding a solution to North Dakota’s ballooning gas-flaring problem will require a “very difficult balancing act” that could take until the end of the decade to work out.

“We have to balance the ability to build gathering systems against the waste that takes place with flaring,” Lynn Helms, director of the state’s Department of Mineral Resources, said in a Nov. 20 Webcast.

“So we’re looking at toward the end of this decade before we really get this flaring dynamic under control.”

Gas production continues to increase at a faster rate than the more desirable crude oil, setting yet another production record in September at 793,546 thousand cubic feet, mcf, per day. Average oil output for the month was 728,494 barrels per day, also a record.

Bakken’s mounting gas volumes

By the time oil production reaches 1 million barrels per day, projected to occur in 2013 or 2014, the associated gas will amount to around 2 billion cubic feet per day, a huge volume that has state regulators concerned. “If we are flaring 5-to 10 percent of that, that’s going to be equal to all the gas we produced in the first five years of the 21st Century,” Helms noted.

Additions to pipeline gathering and processing capacity are said to be helping, but the percentage of gas flared rose to 30 percent in October. In comparison, oil companies flared 23.5 percent of their natural gas in December 2010, up from 13.7 percent the year before. The historical high was 36 percent in September 2011.

“Even though we’re seeing a lot of build out of infrastructure … we are still very much in a struggle to reduce flaring in the state,” Helms said. “This is going to be a hard problem to solve.”

Flaring exemptions on rise

However, because of the relative slowness in expanding the gas-gathering and processing system, he added, the state is getting a “tremendous” number of operator requests for variances and exemptions from regulations governing flaring. Drillers can now flare natural gas for one year without paying taxes or royalties. After one year, companies must either connect to a gathering line, an electrical generator, or apply for an exemption. The exemption would allow an operator to not pay taxes and royalties should connection or an electrical generator be deemed economically infeasible.

Helms said that strict adherence to North Dakota’s production restrictions in the current infrastructure environment could potentially reduce the profit on Bakken-Three Forks wells by 25 percent.

“For investors that’s probably too severe and would very (likely) reduce the economics and impact the number of people that we have working, the rig count, and all those sorts of things,” he said. “At the same time, we have to look at the waste issue,” Helms said.

Oil outweighs gas

However, the economic reality is that gas makes up just 6 percent of the energy and a paltry 3 percent of the income derived from Bakken-Three Forks production, while the more desirable oil makes up well over 90 percent of the pie. “We’re seeking that balance — the difficulty in building up the gathering systems and getting easements against the economic waste, against the resource waste and energy waste, against having a severe economic impact,” Helms explained.

He said for now, the state has opted to allow more flaring because strict application of the regulation “would negatively impact the profit of the Bakken well by as much as 25 percent … in an environment where they (operators) can’t get a gathering system.”

The oil and gas industry is reportedly investing more than $3 billion in infrastructure to capture the natural gas.

Most land in private ownership

Helms said the biggest problem in expanding the gathering system is acquiring rights of way or easements across private property to lay pipelines. In North Dakota, 82 percent of the land is privately owned, he said. “It’s a long process of a half-dozen right-of-way negotiators coming to a house and asking for more and more and more of their land,” he said.

That’s because today’s agreements generally call for one pipeline per “exclusive” easement, “so they begin to take up a lot of their land,” Helms noted, adding that lawmakers are looking at possibly replacing the current practice with multiple use corridors, where several pipelines and a power line would occupy the same easement.

Flared gas alternatives

The state has looked at a number of possible uses for the gas that is currently being flared, including the conversion to anhydrous ammonia fertilizer. (See related story, page 13) Previously investments were made for research into electrical generation, and compression of natural gas for use as fuel or transport to a processing facility.

Future projects may include use of flared gas to produce petrochemicals, conversion of flared gas to liquid fuels, and removal of natural gas liquids from flared gas.

“It is hoped the legislature will consider tax exemptions and royalty certainty to provide incentives for beneficial uses like the above,” Helms said in his monthly Director’s Cut report.


TOPICS: News/Current Events; US: North Dakota
KEYWORDS: bakken; energy; naturalgas; oil
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1 posted on 12/05/2012 6:12:52 AM PST by thackney
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To: thackney

Sounds like the EPA has received their means of shutting them down on a silver platter.


2 posted on 12/05/2012 6:18:22 AM PST by E. Pluribus Unum ("The more numerous the laws, the more corrupt the state." - Cornelius Tacitus, Roman Senator)
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To: E. Pluribus Unum

My thoughts exactly, just the excuse Obuma needs.


3 posted on 12/05/2012 6:21:22 AM PST by izzatzo
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To: Smokin' Joe

Bakken ping


4 posted on 12/05/2012 6:24:07 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney
Yep. Lynn Helms has a good understanding of the situation, and the State is fairly accommodating to the industry.

Anyone who can design a small plant that can operate at a profit, is modular (think 40 ft. container sized loads), and can take advantage of the gas, making fertilizer, generating electricity, and possibly separating NGLs has the potential to make a lot of money. Consider, too, the development shift in the Bakken/Three Forks is toward pad wells, with 4 to 8 wells drilled from the same location, which will mean that the gas involved won't be from just one well, but as many as four (or even eight, as some plans call for).

5 posted on 12/05/2012 6:25:06 AM PST by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing)
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To: thackney

>> Future projects may include use of flared gas to produce petrochemicals

Fertilizer prices are too high. Utilizing otherwise wasted natural gas as feedstock would seem to be a win-win.

I’d like to see that happen closer to home (central TX). I don’t think we’re flaring away a *whole* lot in my area though.


6 posted on 12/05/2012 6:26:22 AM PST by Nervous Tick ("You can ignore reality, but you can't ignore the consequences of ignoring reality.")
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To: E. Pluribus Unum

Although if there ever IS a real issue with man-made global warming, I suppose 30,000 gas flares going 24/7 would do it.

This is a valuable resource and should not be wasted in that manner.


7 posted on 12/05/2012 6:27:26 AM PST by Buckeye McFrog
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To: thackney

Is this the kind of the thing the planned refinery that Bobby Jindahl is looking to build in Lousiana would eliminate? I though I read something inthat thread. The flaring seems like such a waste of potentially usable product.


8 posted on 12/05/2012 6:27:32 AM PST by SueRae (It isn't over. In God We Trust.)
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To: thackney

Thackney we’re running into the same problem here, with all the local drilling we don’t have the gathering system in place to bring it all in and we’re having to flare it. Building the pipelines is alot slower than the drilling.


9 posted on 12/05/2012 6:29:45 AM PST by Dusty Road
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To: Smokin' Joe
the development shift in the Bakken/Three Forks is toward pad wells, with 4 to 8 wells drilled from the same location

That is the design used on the Alaskan North Slope.

10 posted on 12/05/2012 6:30:00 AM PST by thackney (life is fragile, handle with prayer)
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To: Buckeye McFrog
This is a valuable resource and should not be wasted in that manner.

So where did you get your engineering degree?

If you know how to avoid this, you could make millions!

You obviously know more than the engineers involved. Why aren't you hopping on this?

11 posted on 12/05/2012 6:31:14 AM PST by E. Pluribus Unum ("The more numerous the laws, the more corrupt the state." - Cornelius Tacitus, Roman Senator)
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To: SueRae

When you have no where to go with it you have to flare it until you do.


12 posted on 12/05/2012 6:31:48 AM PST by Dusty Road
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To: SueRae

No. A refinery does not affect this.

The flaring is being done due to a lack of natural gas gathering line piping being in place. It will get built but it takes time; drilling is faster.


13 posted on 12/05/2012 6:32:50 AM PST by thackney (life is fragile, handle with prayer)
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To: E. Pluribus Unum
Sounds like the EPA has received their means of shutting them down on a silver platter.

Maybe that explains part of the push for a carbon tax.

But not really. The wells are spread apart by virtue of the lease spacing (two square miles), so the effects of any flare combustion products are significantly diluted.

The Bakken oil (and gas) is sweet, too, and the absence of significant amounts of sulfur will make action against flaring more difficult.

14 posted on 12/05/2012 6:33:05 AM PST by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing)
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To: Buckeye McFrog
This is a valuable resource and should not be wasted in that manner.

ANY extra heat in North Dakota is welcome this time of year. (8^D)

We've had snow on the ground for over a month, and temps range from single digits at night to sometimes the low 30s in the heat of the day (it is only "Fall", not "Winter", yet).

Not sure what the weather is like where you are.

15 posted on 12/05/2012 6:38:02 AM PST by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing)
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To: thackney
That is the design used on the Alaskan North Slope.

(One of the few places on the planet with people and worse weather!)

It just makes sense, imho. Smaller footprint, more centralized production facility, one location, one road, etc. It saves a fortune in infrastructure costs, and resources as well.

16 posted on 12/05/2012 6:41:12 AM PST by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing)
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To: Smokin' Joe; All
Typical of up there for new pads:

Red is the pad, disturbed area.

Lines are the well bores, circles the end of the bore.

It is even more impressive seen in 3D as it follows a narrow layer.

17 posted on 12/05/2012 6:49:57 AM PST by thackney (life is fragile, handle with prayer)
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To: E. Pluribus Unum; izzatzo
Sounds like the EPA has received their means of shutting them down on a silver platter.

Of course we could build a pipeline instead . . .

18 posted on 12/05/2012 7:00:23 AM PST by Hoodat ("As for God, His way is perfect" - Psalm 18:30)
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To: Hoodat
Of course we could build a pipeline instead . . .

Now we know why they're against that, too.

19 posted on 12/05/2012 7:07:54 AM PST by E. Pluribus Unum ("The more numerous the laws, the more corrupt the state." - Cornelius Tacitus, Roman Senator)
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To: Smokin' Joe
But not really. The wells are spread apart by virtue of the lease spacing (two square miles), so the effects of any flare combustion products are significantly diluted.

Since when does logic have anything to do with what the EPA/enviro-Marxists do?

20 posted on 12/05/2012 7:08:37 AM PST by E. Pluribus Unum ("The more numerous the laws, the more corrupt the state." - Cornelius Tacitus, Roman Senator)
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