Gas-oil ratio increasing; flaring is on the wane

The Bakken is well known as an oil basin, but current growth is primarily made up of natural gas output, according to the EIA.

The Bakken has the lowest gas-oil ratio (GOR) of any of the major shale basins in the U.S., and is heavily oil weighted compared to locations like the Permian. According to the EIA, the Bakken is currently producing 1.87 Mcf of gas per barrel of oil. The Permian, by contrast is producing 3.42 Mcf, the Eagle Ford is producing 5.10 Mcf and the Niobrara 9.17 Mcf.

While the Bakken is still producing at a low GOR, the ratio has been increasing steadily. The gas-oil ratio of the Bakken has doubled since 2010, when the Bakken was producing less than 1 Mcf per barrel of oil. Oil output from the basin peaked in 2014, when the Williston was producing over 1.2 MMBOPD. Bakken oil production then fell to about 1 MMBOPD in the aftermath of the oil price crash, and has only grown slightly since then.

Bakken gas production, on the other hand, only plateaued from 2014 to 2017. The resurgence of drilling activity has led gas production to rise this year, and four of the last six months have set new records for gas output, according to the North Dakota Industrial Commission.

Flaring falling, individual well gas output increasing

There are likely several trends that have contributed to this growth in gas output. In previous years in the Bakken, particularly when development was just starting, there was only limited gas gathering infrastructure. Operators with no place to put gas flared it at rates far higher than in other basins. According to NDIC, more than 35% of the state’s gas production was flared before gathering infrastructure was built.

In 2014, NDIC set gas capture goals intended to reduce flaring to 10% by 2020. This effort seems to have been successful, and the industry has only missed its targets in one month out of the past three years. The construction of gas gathering systems means gas is no longer something to be avoided, but is instead another product that can be sold. Locations with higher gas content are therefore more economic, and more likely to be developed.

Reservoir dynamics also mean wells will usually produce increasing volumes of gas as time goes on, as the pressure near the well falls. This trend is visible in wells in the Bakken, with production from individual wells generally showing increasing GORs.

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