The good news for gas production in North Dakota is that it is increasing rapidly, reaching an all-time high 21.3 Bcf, or almost 688,000 Mcf/d, in May.
The bad news is that more than 30% of the gas produced in the state is being flared, because there is not sufficient processing and pipeline infrastructure in existence to carry the gas produced in the Bakken Shale oil play, in the western half of the state, to market, according to statistics released recently by the state's Department of Mineral Resources.
And while oil and gas producers and midstream companies, state regulators and academic researchers are all working to reduce the volumes of gas that go up in smoke in the oil field every day, some environmentalists and community groups complain the pace of progress is too slow.
The rapid increase in gas flaring in the Bakken region has led to a tripling of US gas flaring between 2008 and 2011, according to a recent Barclays report. The researchers found that 7.1 million cubic meters, about 250 Bcf, was flared in the US in 2011.
Mineral Resources Director Lynn Helms wrote in the July 18 issue of his public report, The Directors Cut, "the percentage of gas flared was down significantly to 31.5%. The historical high was 36% in September 2011."
This percentage of gas flaring represents about a 0.5 percentage point decline from the level Helms reported in May.
"The oil and gas industry has already made a significant investment in gas gathering and gas processing infrastructure; in excess of $4 billion has been committed," Kari Cutting, vice president of the North Dakota Petroleum Council, said in a statement.
She pointed to a recent Oneok announcement that it plans $3.7 billion of investments in gas, natural gas liquids and crude oil infrastructure in the Bakken play over the next three years.
In addition to the planned construction of new infrastructure to take the gas to market, the Energy & Environmental Research Center at the University of North Dakota is looking at ways to put the gas produced in association with Bakken oil to work closer to its production point, John Harju, associate director for research, told Platts Monday.
"We're certainly focused on technological developments," Harju said. The EERC researchers are looking at developing a distributed NGL-recovery technology that would allow some of the liquids to be stripped out of the gas stream close to the well head, prior to flaring or otherwise disposing of the remainder of the unwanted gas.
The liquids could then be marketed, providing an economic incentive to the producers to reduce the volumes of flared gas.
Another promising technology under development involves using the high-Btu- content gas at the well site itself to reduce the volumes of diesel fuel used to run the rigs.
Harju said the researchers also are engaged in a demonstration project in conjunction with Continental Resources to use the rich raw gas to fire electric generators that would provide power to run the rigs.
However, some critics contend that despite the efforts by the energy industry, state officials and academic researchers, not enough is being done to reduce the level of gas flaring in the state.
Wayde Schafer, regional representative of the Dacotah Chapter of the Sierra Club, told Platts that the gas infrastructure development in the Bakken has not kept pace with the rapid growth of oil production, resulting in a waste of the potential benefits of developing the gas resource.
"We're getting the pollution from burning it without getting the energy," he said.
He added that current DMR regulations allow for producers to flare gas for up to a year after first production with no cost or penalty.
"North Dakota incentivizes the burning by not taxing the gas at the well," he said. Nationally flaring consumes only about 1% to 2% of gas produced, compared to almost one-third in North Dakota he said.
"Other states tax the gas coming out of the ground. In North Dakota, it's cheaper for them to flare than to build a pipeline," Schafer said
