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Vol. 18, No. 11 Week of March 17, 2013
Providing coverage of Bakken oil and gas

Continental headed to zero

Credits transportation infrastructure improvements for dramatic decline in Bakken gas flaring; already reduced to less than 10%

Ray Tyson

Petroleum News Bakken

Continental Resources may be among the first producers in the Bakken oil patch to eradicate natural gas flaring from its operated well sites, or at the least come close to attaining that goal.

The big Oklahoma-based E&P independent already has reduced flaring to less than 10 percent in the Bakken, well below the 29 percent average recently cited by the North Dakota Industrial Commission.

However, “getting as close to zero percent flaring as possible” is Continental’s objective, according to the company’s annual 10-K report.

First-mile hookups

William Frederick Bott, Continental’s president and chief operating officer, credits development of transportation infrastructure within a mile of the wellhead that allows produced gas to be shipped to market rather than wasted through flaring.

“We focused a great deal of effort the past two years on first-mile hookups to ship oil and gas directly from the wellhead to pipe and rail facilities in the Bakken,” Bott explained during a recent conference call.

“This effort has allowed us to again set the pace in industry in reducing flaring in the Bakken … I mean clearly gas is a valuable and marketable commodity.”

Still, because well sites are generally situated in remote areas of the Williston Basin and away from infrastructure, flaring remains the only option for many field operators.

“However, we and other operators have continued to address this issue and work hard (on) these gathering systems with our midstream partners to make sure we can gather that gas as quickly and efficiently as possible,” Bott said.

As operators continue to move to larger, more efficient drilling pads, they can better plan for transportation infrastructure to ensure that gas-gathering systems are hooked up early.

“In fact, we hook them up every time we can before we start drilling,” Bott noted. “And so that’s essentially our goal — to do those as quickly as possible.”

The “driving forces” behind further flare reduction, he said, “is to make sure that we have supportive regulatory framework and that landowners also agree that this is valuable enough and access is granted to make sure the infrastructure can be hooked up. We’re very pleased with the result so far, and we’re well ahead of our goal …”

Shareholder resolution in place

Continental’s goal of reducing its Bakken flaring as close to zero as possible followed a shareholder resolution filed by Mercy Investment Services requesting that the producer “adopt quantitative, company-wide goals, based on current technologies, for reducing or eliminating flaring in all operations facilities under the company’s financial or operational control.”

The resolution was withdrawn earlier this year after “productive” dialogue between Continental and its investors, according to CSR Wire, which describes itself as “the corporate social responsibility newswire.”

“While our concerns over the environmental impacts of unconventional oil and gas development remain, we see Continental’s increasing disclosure and goal-setting as a clear step in the right direction,” Mercy director Pat Zerega was quoted as saying in a CSR news story.

Big improvement in last year

In its 10-K filing, Continental reported that during December 2012, the percentage of its natural gas production flared in the North Dakota Bakken was about 10 percent, compared to about 20 percent in December 2011.

“Continental’s announcement shows that it is possible to reduce flaring, and to do so quickly,” Andrew Logan, director of the oil and gas program at Ceres, said in a statement. Ceres is an investors and public interest advocacy group.

“Continental’s goal should serve as an example to its peers in the industry and to regulators and legislators who are working to limit flaring in North Dakota and across the nation.”

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