From the Williston Herald

North Dakota’s oil and gas industry has invested more than $13 billion in gas gathering and processing infrastructure to date, but it needs at least another $11 billion to meet the state’s more stringent gas capture targets that begin in November.

So far, an additional 800 mcf of gathering and processing capacity has been proposed for 2018 and 2019, but these are not nearly enough to get there, according to projections by North Dakota Pipeline Authority Justin Kringstad.

The situation has prompted the North Dakota Petroleum Council to reactivate its flaring task force.

The group consists of more than 60 people representing 20-some of the Bakken’s top oil and gas companies, ranging from exploration and production all the way to processing. The group met last week to lay down a scope of work and set up subcommittees that will look at various aspects of the problem.

The task force approach has been used successfully once before to help rein in flaring.

In 2011, North Dakota’s was burning as much as 36 percent of the gas it was producing. Gas is a co-product of oil production in the Bakken.

The flaring attracted national notice thanks, in part, to a photograph that visually exaggerated how much gas was being flared.

Inaccurate as it was, however, state regulators were already talking about the problem of flaring, which means lost royalties and lost tax revenues. They set goals for industry to increase gas capture to 77 percent by Jan. 1, 2015, 80 percent by April 1, 2016, and 85 percent by Nov. 1 2016.

That target moves to 88 percent in November, and then rises, once more, to 91 percent in 2020.

Last time when the task force met, they had a substantial obstacle working against them. Prices for gas were so low that capturing it was unprofitable. Companies essentially lost a lot more money on every barrel captured than they did on every barrel flared.

That impediment, however, is no longer working against them. Prices have risen, and the product can now be a money-maker.

Ron Ness, president of the North Dakota Petroleum Council said he’s hoping that will help spur investment, and get companies to dust off projects they may have shelved during the downturn.

“Investors were spooked over the past three years,” Ness acknowledged, “but this shows you that even through the lean periods, you are going to be able to produce tremendous amount of oil and gas. That’s a big step forward.”

Technology has boosted the production per rig in the Bakken, giving it the No. 1 and No. 2 spot in rig economics, according to information from the Energy Information Administration.

Infrastructure to capture the additional gas, however, how has to ramp up to meet the improved technology.

Another factor in the mix is the fact that companies seem to be keeping more drilled but uncompleted wells on hand. What exactly is driving that trend is not clear, but U.S. shale plays have become the swing producers for the world, and must ramp up and down quickly according to market conditions.

Solving the gas capture problem will take a regional approach, Ness said.

“Gas is a challenging component,” Ness said. “You cannot store it. It has to keep moving. It’s real time, so you have to take all of those things into consideration.”

Among the missions of the task force will be to aggregate data and determine region by region what investments might be needed.

“That is kind of how you have to look at it,” Ness said, “because gas is not all in one big, bathtub. There are limits on where the product can move. If you have to cross Lake Sakakawea, for example, that’s more of a challenge, so maybe it has to move to the southwest. So that is where getting all the players together really begins to make a big difference.”

The task force has established six subcommittees in all one each for right-of way and tribal regulatory challenges, H2S contamination which doesn’t play well with newer technology, remote capture technologies, new operator engagement, and reworking gas capture plans to better reflect advancements in the Bakken oilfield.

The next meeting of the Natural Gas Capture and Infrastructure Development Task Force will be in March in Denver, in conjunction with the NDPC’s annual meeting at that location.

“That should begin to give us the big picture of what needs to be done,” Ness said.

The group hopes to deliver a completed play by mid-May, or, at the latest, by the time of the Williston Basin Petroleum Conference.

“We are in growth mode and moving forward,” Ness said. “That is why this task force is critical. We have to know there is a plan to capture gas.”

 


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