North Dakota Drillers Propose New Flaring Control Plan; Push for Pipelines

Yesterday, the North Dakota Petroleum Council introduced a new proposal to the North Dakota Industrial Council committing the industry to capture 85 percent of the natural gas flared at wellheads within two years. Within six years, the Association committed to capturing 90 percent and upwards of 95 percent should regulatory agencies, the Legislature, and state and tribal stakeholders come on board.

The practice of flaring occurs at wells and it essentially burns off excess natural gas that cannot be captured or stored at the wellhead - either for economic reasons or due to a lack of storage capacity. Assumptions are sometimes made that wells, be they oil or natural gas, only produce one type of hydrocarbon. In reality, associated natural gas is commonly found when drilling for oil. The industry practice of flaring has been in use for several decades for economic and practical reasons when testing a well. When there is no pipeline or storage facility to handle the extra gas, producers flare or burn off the excess rather than venting the gas for worker safety and well integrity reasons - especially during hydraulic fracturing - as trapping the gas and chemical solutions can cause significant damage to the well and wellbore. The incredible pace of development and burgeoning supplies of natural gas brought on by fracking at times made the price so low that it was cheaper to burn it off at the wellhead than ship it to markets or incur the capital costs of building new pipeline or storage capacity; not to mention the regulatory timetables involved to develop new infrastructure.

North Dakota has been at the center of many environmental debates surrounding the incredible pace of fracking and the subsequent booming oil production in the Bakken region. Environmental groups and regulatory agencies have raised concerns that increased unconventional production resulting in flaring also increases methane emissions (a potent greenhouse gas) as well as volatile organic compounds and other ozone causing air pollutants. At one point, over 1/3 of the state's natural gas was being flared. That number has since come down to 28 percent, but a 2011 New York Times article noted that producers in the state burned enough gas that year to heat 500,000 homes for a single day. Despite this rapid uptick in flaring, it's important to note that North Dakota has never been designated in non-attainment under Clean Air Act requirements, but the public's reaction to the pace of development and increasing emissions have prompted the industry to take new action.  

Under the Petroleum Council's proposal, applicants seeking new permits to drill would be required to develop a gas capture plan for review and approval by the state's Industrial Commission. The Council said, "Each GCP (gas control plan) will include a location of the well and closest pipeline and processing plant; the system capacity of gathering and transport gas lines; the volume of gas flowing from multi-well pads; and, a time period for connection." Starting this September, the proposal would also require operators to submit gas capture plans for wells where the largest amount of flaring is occurring. According to their presentation, roughly 60 percent of all flaring occurs at only 4 percent of the state's wells. If operators fail to submit control plans then fines, penalties, and regulatory directives to reduce production could be put in place. 

As mentioned above, one of the key reasons that exacerbates the rate of flaring is a lack of infrastructure which are often referred to as gathering systems and processing. Gathering lines are small diameter pipelines that connect to production fields and wells which then bring the gas to storage areas or processing plants where water or other impurities are removed before it moves into the larger pipeline network.  Natural gas liquids or "wet gas" are also important and valuable by-products that are removed during processing which are used in numerous manufacturing and petrochemical products.  According to the Council, over 9,500 miles of gathering lines and 1.25 billion cubic feet per day of gas processing have been constructed since 2006 but much more infrastructure is needed because the ramp up in production has been so large that it has led to substantial constraints at existing gathering facilities. To help alleviate part of this situation, the industry group believes that more must be done to speed up the process for acquiring right of way for new pipelines. Their release  said, "Easements may take 180 days or more to obtain, which is the period that a well is producing at its highest rate. In some cases, landowners will not grant easements at all. The industry recommends that a ROW (right of way) Task Force be formed to review potential legislation to improve ROW access to reduce flaring. The task force would include the North Dakota Pipeline Authority (NDPA), the State Energy Impact Coordinator, county leaders, landowner groups and industry members, and would be headed up by the Attorney General."