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.
Somebody IS hopping on this, and they are going to get very, very rich.
No I am not an engineer, but I do business in the Oil Patch.
I know this is an issue that concerns them and they are working on it very diligently.
Now please state your argument why burning off millions off cubic feet of natural gas every day for no good purpose is a GOOD idea.
I never said it was a good idea. Right now it is a necessary side-effect of producing oil. Are you suggesting they stop drilling for oil until a pipeline is built or your genius friends present their secret solution?
Thank you for those explanations. I learn something every day...and fellow Freepers are a goodly part of that. :-)
This is North Dakota. We can use all the heat we can get. (8^D)
It isn't burned off for "no good purpose", it comes out of the ground with (dissolved in) the oil. The oil goes into big tanks (450 bbl uprights) neatly. The gas, not so. Without a way to contain, process, or transport the raw gas, you burn it, otherwise you risk explosions, nasty V.O.C.s and all sorts of other problems.
The alternative is to stop production and bring one of the few bright spots in economic gloom to a screeching halt until a feeder pipeline can be built over hill and dale to every wellsite.
I know North Dakota is only that big on the map, but you are talking about roughly 20,000 square miles that will have to be covered. That takes time.
The situation is temporary for any given wellsite, the amount being burned represents the lag in building pipelines to transport the gas.
What is the horizontal scale?
Do you have a link for this?
Thanks
Seismic is good (when you have it), but we often end up steering (up/down) by MWD Gamma Ray tool readouts and cuttings samples. For "layer cake" geology, there are a lot of ups and downs down there, and the occasional fault.
Can you explain why you think burning at the well site is significantly worse for the environment than burning at the end user heater or power plant?
That is CD-2, the western drillpad from Alpine by ConocoPhillips, located:
https://maps.google.com/?ll=70.333649,-151.01223&spn=0.051359,0.222988&t=h&z=13
The image I posted was from a blog.
http://northslopeoil.wordpress.com/ See March 1, 2011
It was taken from a bigger map of essentially the entire North Slope shown that way. I know I’ve seen that before at one of the smaller oil company web site. I’ll find it and link to it to show scale.
This is the same area, larger map with a scale included.
http://www.brooksrangepetro.com/pdf/maps2011-12/web_west_11x17l.pdf
The most western cluster on the link above is the same well pad, just to the left of the words Alpine 1 (which is the cluster to the right). This link doesn’t have the detail of the curving bore path, but it does show stop and start point and it includes a scale. Several miles long on most of the well bores.
I used to work this area. I was a design engineer for the facilityies North and South which came a few years after the CD-2.
One more link for a reference map in relationship to the rest of the North Slope fields.
http://www.brooksrangepetro.com/pdf/maps2011-12/Web_regional_11x17l.pdf
“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... generating electricity...has the potential to make a lot of money.”
We have three German made generating plants in 40’ containers sitting at the landfill four miles south of my house, burning landfill methane and generating kilowatts.
http://www.catawbacountync.gov/ue/cogen_links.asp
Correct. Texas already has a large infrastructure of pipelines, thus not a problem.
Thanks for the info. I’ll see what I can find out about the manufacturer, and what the requirements are for preprocessing the feedstocks.
“Can you explain why you think burning at the well site is significantly worse for the environment than burning at the end user heater or power plant?”
Hey, stop thinking outside the box.
Looks like a printed circuit board.
Spider Flares ...
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