North Dakota Pipeline Authority Director Justin Kringstad released a report Oct. 21 detailing the current state of natural gas gathering infrastructure and related flaring as oil and natural gas production in the state continues to rise. The report concluded that “the momentum is shifting in favor of further expansion of natural gas gathering and processing,” but added that “it is evident that reducing natural gas flaring to somewhere below 5 percent in North Dakota will take years to accomplish and the state and industry can expect several challenges along the way.”
Furthermore, the report states that the building of all associated infrastructure such as crude oil, natural gas, water and electrical “is going to take a great deal of cooperation and patience between all stakeholders.”
However, the report also states that North Dakota is positioned to become a global leader in oilfield development. “With much of the Bakken producing region previously undeveloped, this young oilfield can and should become the new industry standard by utilizing modern materials, technologies, and best practices.”
A tool for decision makers
Kringstad told Petroleum News Bakken that while he regularly posts charts on natural gas production as well as capture and flaring on the Pipeline Authority’s website, he felt it was time to include a narrative adding background to the graphics to help people better understand the issues.
“Obviously flaring has always been an important issue, but at the current time I think it was appropriate to have a fact-based report available for all interested parties to take a look at exactly what’s happening so that decisions can be made based on the facts,” Kringstad says. “I wanted it to be strictly as factual as possible and let the policy makers and industry make decisions from there.”
Gathering challenges
The report details the production of natural gas in North Dakota and the challenges associated with gas gathering and processing infrastructure. As oil and associated natural gas production continue to increase month-on-month, the demand to build gas gathering infrastructure increases accordingly. In addition, there are also problems with existing gathering infrastructure, such as pipeline capacity and compression.
Because of those limitations, it is not uncommon for existing wells that are connected to gathering infrastructure to be knocked off the infrastructure and reverted to flaring when new high pressure wells come online. “It should be noted that simply connecting a well to a gas gathering system may not completely extinguish the flare if the pipeline system cannot handle all of the new production,” the report states.
Another gathering challenge in North Dakota is the precipitation of natural gas liquids as the raw natural gas is transported from the wellhead to processing plants. As those liquids fall out of the gas stream, they pool at the bottom of the pipe. The process is exacerbated during North Dakota’s cold winters resulting in a decrease in the volume of pipeline capacity.
More processing capacity
According to the Pipeline Authority’s report, there are currently 20 gas processing plants in North Dakota with a combined capacity to process approximately 1 billion cubic feet of gas per day, but more processing capacity is in the works. Six new or expanded plants with approximately 450 million cubic feet of processing capacity are slated to come online in the next several years according to the report.
Hess Corp. recently completed an expansion of its Tioga processing plant, and Alliance Pipeline announced Oct. 29 the completion of its Tioga lateral pipeline that will run from the Hess plant and connect to Alliance’s main transmission pipeline where it enters the U.S. from Saskatchewan near Sherwood in northern Renville County (see story on page 1).
Export capacity
Although flaring of natural gas in North Dakota is not directly related to interstate transmission pipeline capacity, having adequate takeaway capacity is another important issue in the state. “It should be noted that making a quantitative link between current flaring and interstate pipeline capacity is difficult; but nonetheless, ensuring North Dakota natural gas has an adequate means of moving to market over the long term is crucial.”
The report indicates there are three primary interstate lines that transport North Dakota natural gas from the intrastate gathering systems to out-of-state markets: the Alliance, Northern Border and WBI Transmission pipelines. As the report states, the WBI Transmission pipeline transports gas on a regional basis while the Alliance and Northern Borders pipelines originate in Canada and run to the U.S. Midcontinent. North Dakota gas is picked up along the way.
A 2012 Pipeline Authority report found that competition for export capacity to Mid-Continent markets on the Alliance and Northern Border pipelines will increase as North Dakota gas production and capture increases. In response, WBI Energy is proposing to build a 400-mile gas transmission line from a point near Williston to eastern North Dakota and/or western Minnesota.
Economic assessment
The Pipeline Authority report also looked at the economic losses due to flaring using a crude oil price of $97.18 per barrel and a natural gas price of $8 per thousand cubic feet at the wellhead before the natural gas liquids are removed. The report indicates that in August 2013, 97.3 percent of total economic value of North Dakota natural gas was captured, i.e., only 2.7 percent of the economic value was lost due to flaring.
Likewise, the report found that in August, 92.8 percent of the energy content of the state’s petroleum production was captured, with 7.2 percent lost due to flaring.
U.S. flaring
According to the Pipeline Authority report, less than 1 percent of all the natural gas produced in the U.S. is vented or flared on average. That is in comparison to North Dakota, which is currently flaring approximately 29 percent of the gas produced in the state.
However, the report states that the low percentage of overall U.S. flaring is the result of both an industrialized economy and “decades of building interstate natural gas pipelines that allows large volumes of production to be moved to areas of consumption.” The report goes on to say that North Dakota is not immune to the same market forces that were responsible for the building of that nationwide infrastructure.
How to get the report
The report, the formal title of which is “North Dakota Natural Gas, A Detailed Look at Natural Gas Gathering,” is available at the Pipeline Authority’s website at www.northdakotapipelines.com. The report is in PDF format and is 19 pages long with numerous charts.
