Gas connects hit high

Progress continues on new gathering lines; older systems not meeting demand

Mike Ellerd

For Petroleum News Bakken

A sure sign that the ongoing construction of gas gathering infrastructure in North Dakota is gaining ground on capturing natural gas was the record number of 185 new oil wells connected to gas gathering systems in April. That milestone was announced by North Dakota Pipeline Authority Director Justin Kringstad during a June 10 press conference. The new April well connections bring the total number of wells connected to gas sales in the state to well over 6,000.

The increase in gas connections comes after months during which the number of new well connections actually decreased. In October 2012 the number of new well connections began a downward trend that continued through January 2013. In February the number of new connections increased, but the number of new well connections again fell in March to below 100, a level not seen since 2011. The April increase and the new record are encouraging, especially in light of the fact that the weather conditions then were less than ideal in western North Dakota. “April was a tough month weather-wise,” Kringstad said at the press conference, which was jointly held with the Oil and Gas Division of the Department of Mineral Resources.

Kringstad also noted that infill drilling drives up the economic incentives to build gathering pipelines into areas where it was not previously economic. That, he said, not only provides for the capture of gas from the new infill wells, but also from the existing wells that have historically been flared. “So I think there’s going to be a second chance for a lot of wells to get connected.”

Concurrent with the record number of wells connected to gas gathering infrastructure was an overall downtick in the total number of wells in the state that are not connected to gathering systems. However, while Kringstad views that downtick as positive, he said he is not going to get too optimistic until that trend continues for several months in a row.

North Dakota Pipeline Authority charts showing the current flaring/gathering conditions and trends are displayed in the Bakken Stats section beginning on page 9.

But flaring remains at 29 percent

Even with a record number of new connections, Kringstad said the amount of gas flared in the state remained nearly constant at 28 to 29 percent. The Pipeline Authority puts flaring at 28 percent but doesn’t include confidential wells that are included in the Oil and Gas Division’s estimate of 29 percent. However, the noticeable shift was in the amount of gas flared from stranded wells versus those being flared on wells that are currently connected to gathering systems. Specifically, there was a decline in flaring from wells not previously connected to gathering systems, but there was actually a rise in flaring from wells that have historically been connected.

Oil and Gas Division Director Lynn Helms said the reason that new wells have historically been flared is because construction of gas gathering pipelines has not kept pace with drilling, but the record number of new connections in April, he said, indicates that more work is being done to get gas gathering pipe in the ground.

But just getting more pipelines in the ground and connecting wells to those pipelines is only part of the equation according to Helms. “The other part of the equation is that the Bakken and Three Forks just continue to surprise people in terms of productivity and in terms of gas production.” The gathering systems that were built a few years ago, he continued, are proving to be too small, so compression is going to have to be added and pipes are going to have to be expanded. “And so a lot of the work that went into the ground over the last few years, some of it has to be repeated. And that’s why we’re still flaring at 29 percent.”

Ultimate flaring target?

When asked about North Dakota’s ultimate gas capture goal, Kringstad said 100 percent gas capture in North Dakota is potentially not attainable, but that capture above 90 percent is not only attainable but is also very realistic going forward. He did note, however, that it will take time to get the additional infrastructure in place. Historically, Kringstad said, gas capture was in the 95 to 97 percent range in the pre-Bakken production era.

Helms agreed that 90 percent capture, i.e., a reduction of flaring to 10 percent, is definitely the target. Ultimately, however, Helms would like to see flaring get down to historic levels in the 2 to 5 percent range.

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Another key to reducing ND flaring

In the past, Kringstad said, Bakken gas has been put into major pipeline systems that take it to Mid-Continent gas markets. The new WBI Energy pipeline, he said, offers a new market opportunity with potential price advantages for operators to move their gas toward eastern North Dakota and western Minnesota, providing both regions with a new supply of natural gas for both consumer and industrial needs.

As Petroleum News Bakken reported in early June, the pipeline is estimated to cost between $650 million and $700 million. As proposed, the 24-inch pipeline would move 400 million cubic feet of natural gas per day toward the new market area, with expansion capacity to 500 million cubic feet per day. Kringstad said the pipeline would be WBI Energy’s largest single pipeline project.

The combination of the increased gathering capacity and the proposed WBI Energy pipeline “was very exciting news for us here in April,” Kringstad said. “We’re very excited to see things moving forward in this trend throughout the summer.”

—Mike Ellerd