The North Dakota Petroleum Council’s Flaring Task Force offered solutions to the state Industrial Commission to reduce flaring in the state to as low as 5 percent within the next six years.
On Jan. 29, the task force presented its report outlining gas capture plans, reiterating how unusual it is for industry to come together in this way.
“After much gnashing of teeth, and heated debate, I can’t emphasize how hard it was to come up with these solutions,” says Eric Dille of EOG Resources, task force chairman. “It was very difficult and unique for industry to do that.”
The report outlined how the industry could capture 85 percent of the natural gas within two years, 90 percent in six years and possibly even hit a 95 percent goal with cooperation from the commission, state agencies, lawmakers, tribes, landowners and industry. North Dakota is currently capturing approximately 70 percent of the natural gas produced in the state and the other 30 percent is flared.
Industry takes bold step, encourages regulation
Reductions would come primarily from a combination of gathering pipelines and processing plants, but proper planning and communication would be paramount.
Operators would be required to create a gas capture plan prior to filing for a drilling permit instead of waiting until a year into production. Each plan would include the location of the well and its gas volumes, as well as locations of the nearest pipeline and processing plant with each system’s capacity, and a time period for connection.
The task force also included penalties for failure to comply. If a gas capture plan is not submitted, new drilling permits could be suspended or denied, while production on existing wells could be restricted until the operator complies.
“But this is a very mechanically finicky thing,” Dille said. “If you shut in a well or choke it back, it may never come back as well (as before). If you shut it in, it may never start again. So we would ask if you’re going to curtail production, may it not be to the detriment of that well.”
Extensions would be available for extenuating circumstances such as plant construction, power outages or inclement weather. Though companies may currently apply for extensions, there are no requirements to develop capture plans. The task force recommended the commission revise its current gas production and sales reports to provide more detail about whether flaring is due to those extenuating circumstances. They also requested reservation and non-reservation flaring be tracked separately due to tribal policy challenges and permit scrutiny.
Task force recommends swift action
The task force recommended a tentative date of June 1 for the Industrial Commission to require the capture plans on new wells. Operators would have until Sept. 1 to submit plans for existing wells that flare the largest volumes of gas, and until March 1, 2015, for all other wells flaring longer than 90 days.
Dille told Petroleum News Bakken following the meeting that in this particular aspect of the report, not all industry leaders were on the same page. “Regulating yourself is very difficult,” he said. “Many people said we shouldn’t propose anything, let the state do that. But it’s very interesting in that oil pays for the infrastructure so you have to keep production going to pay for the gas processing. There’s a fine line there to keep rigs and oil flowing to pay for the rest of the infrastructure.”
Tackling right-of-way challenges
The biggest obstacle industry faces in capturing the gas is obtaining right-of-way access from landowners. In addition to requesting policy and legislation to enhance access, the task force recommended the formation of a right-of-way task force to address the problem.
“We hope the right-of-way task force would come up with solutions as there are several, very large legal issues and in an agricultural and private property state like North Dakota, those are not small issues,” Dille told Petroleum News Bakken. “So that’s why we’d encourage the state attorney general to be involved in this.”
The task force also recommends that the commission develop a hotline to offer landowners an easy way to notify the appropriate person to address any issues and ensure quality control. It would complement the new gathering pipeline rules approved by the commission in December that will go into effect April 1.
Finding a place for new technology
Chad Wocken of the University of North Dakota Energy and Environmental Research Center showed the commission a database that was created to assemble information about remote capture technology vendors in order to match them with operators seeking on-site flaring solutions. The task force recommended the state increase funding for this type of technology as well as provide tax credits and incentives for value-added ventures using natural gas, such as petrochemicals and fertilizers.
The commission praised the task force for its clear plan, and Attorney Wayne Stenehjem encouraged his fellow commission members to “be prepared to act as swiftly as possible.”
Gov. Jack Dalrymple said he was intrigued by the gas capture plan and said it offered a lot of practical applications. “It could make a big difference,” Dalrymple told the task force. “It depends on your voluntary commitment. I appreciate your willingness to work on this with us.”
After the meeting, Dille reiterated the importance of a synchronized approach. “We believe there are projects that will get us there,” Dille said. “Ninety-five will be really tough, but we can get there if everybody is willing to put a shoulder to the wheel.”
