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    Bakken Flaring Still Exceeding Targets: EIA


Weak price environment constrains processing capacity additions, agency says

by: Dale Lunan

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Bakken Flaring Still Exceeding Targets: EIA

Efforts to reduce flaring in the Bakken associated gas fields of North Dakota continue to fall short of state-mandated targets, the US Energy Information Administration (EIA) said in its weekly natural gas update published February 13.

In 2014, the state implemented natural gas capture goals to limit the amount of associated gas flared during crude oil production, but every month since March 2018 those goals have not been reached, the EIA said. In November 2019, the most recent month for which data is available, only 83% of produced gas was captured, short of the current target of 88%. The target will rise to 91% in November 2020.

In November 2019, associated gas production in North Dakota reached 3.1bn ft3/day, a ten-fold increase from January 2010. But through the first 11 months of 2019, about 20% of that production – or 560mn ft3/day – was flared, 40% more than in 2018. Increased gas production in the state, the EIA said, is primarily related to associated gas produced with oil from the Bakken formation.

Since the state-wide targets were implemented, the lack of gas processing capacity in the Bakken has constrained oil production, and oil producers have been searching for ways to increase that processing capacity. In 2019, 710mn ft3/day of new capacity was added, to bring total capacity to 3.1mn ft3/day.

Another 900mn ft3/day of processing capacity is expected to be added this year and next to support crude production growth, “but the new capacity may fill up faster than anticipated,” the EIA says.

Recognising that about three-quarters of all flaring is associated with oil wells that are connected to gas gathering pipelines, the North Dakota Industrial Commission (NDIC), which oversees the state’s flaring rules, held a hearing last November into the issue and subsequently issued an order encouraging firm service contracting on natural gas gathering systems in the state.

“In North Dakota, most contractual agreements between natural gas producers and purchasers are for interruptible service, which means a producer may be denied the ability to transport natural gas in a gathering system,” the EIA said. “Firm service contracts provide a greater level of certainty to producers because service along the gathering line is guaranteed and may reduce the amount of well shut-ins and flared natural gas.”

The current low gas-price environment, the NDIC found, could pose a challenge to the build-out of new processing capacity; firm service contracts could mitigate this because investments with guaranteed commitments provide greater economic certainty to developers.