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North Dakota’s Natural Gas Problem

One of the by-products of oil-drilling is the release of associated natural gas. When properly collected, this gas can serve as an additional energy source for many homes and businesses. Unfortunately, the infrastructure required to properly capture the excess gas is expensive and complicated to set-up. For this reason, many rigs choose to flare the gas by burning it as it reaches the atmosphere. In North Dakota however, efforts are being undertaken to prevent this wastefulness.

Currently, nearly 1/3 of the natural gas produced from oil-drilling projects in North Dakota is flared. In response to the state’s increased oil production in recent years, and subsequent increase in burn-off, the North Dakota Industrial Commission (NDIC) has put goals into place in order to decrease the amount of flared gas in the coming months and years.

Fortunately, rigs are already on their way to achieving the targets set before them. The first was 26% flared by the end of Q4. The figure already sat at 28% in August of 2014. Eventually, the goal is to get down to 10% by 2020. As unfortunate as it seems to lose all this extra gas, flaring is a considered a more environmentally-conscious option as opposed to venting. Venting natural gas directly into the atmosphere releases incredible amounts of methane, which is far more detrimental to the atmosphere than carbon-dioxide.

Enforcement of the NDIC’s mandate will unfortunately hinder some drilling processes. Cutting production is particularly worrisome for the latest and largest production wells in the area, such as the Bakken and Three Forks projects. As stated previously, infrastructure is the largest obstacle to overcome. Most of the flaring is done as a result of a lack of gathering pipelines. However, building these isn’t economically responsible when natural gas production is too low to warrant it, and there are a myriad of factors that can contribute to delays, including securing landowner permission, permits, harsh weather during certain points of the year, and even a shortage of skilled labor.

Jd Fields will continue to keep our clients up to date on further changes concerning the natural gas issues in North Dakota.



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