The North Dakota Petroleum Council, NDPC, flaring task force is putting finishing touches on its recommendations to reduce flaring in the state.
In September, Gov. Jack Dalrymple requested the development of a task force to study the problem and provide some solid solutions to the North Dakota Industrial Commission. The task force will present its findings at the Jan. 29 commission meeting.
Task force Chairman Eric Dille of EOG Resources told Petroleum News Bakken that the task force had hoped to present at the Dec. 19 Industrial Commission meeting, but the technical subcommittee has some recommendations that needed further review.
“We want to give it a good review and make sure membership and everyone’s ready,” Dille said. “We want to get it as good as we can. As far as recommendations on flaring, goals, and criteria, we have developed some targets we think we can hit.”
Aiming for a 5 percent target
The percentage of natural gas flaring has hovered around 30 percent in recent months with an historical high of 36 percent in September 2011. Lynn Helms, director of North Dakota’s Department of Mineral Resources Oil and Gas Division, told Petroleum News Bakken that the state would like to see that percentage down to 5 percent, but if left to the market, he said, that wouldn’t happen before 2021.
“The targets will be stepped so we achieve what Lynn Helms suggested,” Dille said. “We’ll try to get there in that fashion. We want to have some realistic goals but try to get there as fast as we can.”
Compromise on policy change
The task force was charged with finding ways to reduce flared volume, the number of wells being flared and the duration of the flaring. Dille said most of the task force’s solutions will hinge on what the state is willing to do with policy.
“What we’re really recommending is policy recommendations to the state to help,” he said. “Some of it’s on industry shoulders and some of it is on the state’s.”
Helms had indicated at the task force’s inception that the state wanted industry’s feedback on policy changes, so he said he isn’t surprised this is a big part of their recommendations.
“I tried to show them the impact of the existing policies and get them thinking about what kind of policies industry could live with that would accomplish the commission’s goals,” Helms said.
But Helms said the state is also hopeful that the report includes something substantial to reduce flaring. When the task force briefed the Industrial Commission on its progress in October, Dalrymple stated the importance of targeting large companies that could come in and make a big impact on capturing the natural gas to reduce flaring.
“We were hoping the task force would reach out to some of these larger companies and possibly bring them into the task force,” Helms said. “And I’m a little concerned it won’t be there.”
Hunting for a giant-sized investor
Helms said it may become the responsibility of the state through the Department of Commerce or the Oil and Gas Research Council to attract substantial capital investment in well site solutions.
“But how do we as a state, or the industry through the task force, get a GE-sized company to put hundreds of millions of dollars into this and deploy a thousand well site units?” Helms asked. “That’s the guys we’re hunting for.”
When asked if the task force had reached out to large companies, Dille responded, “Those companies are out there and are aware of the situation. But there is the permitting and regulating side, and the financial aspects, that are in the state’s hands.”
Entrepreneurs must prove themselves
Helms said there are two or three major projects being reviewed by venture capital companies for beneficial use of the gas. In addition, there are a lot of entrepreneurial systems for well site gas processing, but they are underfunded.
“When looking at an inventory of 1,000 wells flaring, and entrepreneurs are only able to deploy a few dozen machines, you don’t make much process,” Helms said.
The task force has looked to the University of North Dakota Energy and Environmental Research Center, EERC, throughout the process to review these entrepreneurial remote capture technologies. Dille said all onsite capture vendors have been submitted to EERC, and they are evaluating the economic and technical effectiveness of each.
“We are going to propose that we go forward with pilot testing to see if the technology does what it says it does,” Dille said. “That’s one of the things that has to fall into place — that the technology works as advertised and we can implement it in a fashion that gets us to reduction.”
Whatever flaring solutions are eventually put into place, Helms said it will require a shift in the way industry conducts business.
“The nature of this business is that drillers drill, operators operate, and they sign a long-term contract with a gas processing company and they walk away,” Helms said. “It is going to be hard to change that long-standing business process that’s always been in place.”
