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Page added on February 3, 2014
North Dakota Flares $100m of Natural Gas a Month
It is well known that advances in technology have enabled the US to experience a huge boom in oil production over the past several years. Since 2007, oil production from North Dakota’s Bakken formation has increased by 4,000%, and turning the state into the second largest oil producer after Texas. The problem is that a natural by-product of oil extraction is natural gas, and due to the lack of infrastructure to store, transport, and compress the gas, nearly 30% has to be burned at the well in a process known as flaring.
Think Progress reports that an estimated $100 million worth of natural gas is flared in North Dakota every month, depriving the US economy of a huge source of revenue, and also releasing vast amounts of carbon emissions into the atmosphere.
On Wednesday, the North Dakota Petroleum Council, comprised of hundreds of companies, promised to try and resolve this problem and reduce the amount of gas being flared.
“The industry can increase natural gas capture to 85 percent within two years, 90 percent capture in six years, and could capture up to 95 percent of gas.”
The New York Times wrote that “roughly six million tons of carbon dioxide into the atmosphere every year, roughly equivalent to three medium-sized coal plants,” and “experts expect a 40 percent increase in the gas produced from the Bakken field by the end of 2015.”
Such large volumes of gas are flared because the infrastructure doesn’t exist to make use of it, and it hasn’t been developed due to the fact that gas is worth so little. The North Dakota Industrial Commission estimated that the crude oil to natural gas price ratio was 30 to 1 for 2013.
Ron Ness, the President of the North Dakota Petroleum Council, stated, “where would your emphasis be? If you’ve got a barrel of oil that’s worth $95 and you’ve got [1,000 cubic feet] of gas … that’s worth $4.25, which infrastructure would you build first?”
In July 2013, CERES released a report in which it explained that “natural gas requires its own infrastructure to be collected and marketed, necessitating further investment. In the absence of a strong regulatory framework that prohibits flaring, companies working with a limited amount of capital (which is to say all companies) have a strong incentive to put their capital toward oil production, given its higher return relative to natural gas.”
Oil companies generally don’t have the money to develop huge levels of infrastructure to carry the natural gas off to market, so another alternative would be to slow down the rate of production, reducing the volume of natural gas extracted.
By. James Burgess of Oilprice.com
18 Comments on "North Dakota Flares $100m of Natural Gas a Month"
Nony on Mon, 3rd Feb 2014 2:28 pm
1. Let em flare it. If the value doesn’t motivate capture, then why bother. Yeah, you can require it by regulation, but that hasn’t changed the economics. You’re just mandating people put steel in that won’t pay for itself.
2. I think it’s not just lack of gas pipeline hookups, but gas processing plants. Unlike some gas wells, the gas is not good enough (too wet, etc.) to put directly into interstate pipelines.
Davy, Hermann, MO on Mon, 3rd Feb 2014 2:31 pm
With the nature of the fields being so numerous and producing so little per site I don’t see how they can put in the very expensive infrastructure to capture this gas to deliver to market. I have often wondered why they cannot capture the local gas and use it in generators onsite to run the stripper wells or other drill rigs nearby. A typical Cat gen set can run on diesel or gas. The gas may be too dirty or something. Maybe some of you geo-nerds can enlighten my dumbness
westexas on Mon, 3rd Feb 2014 2:56 pm
Talk about a non-story.
The EIA estimates that about 0.7% of gross US natural gas production was vented/flared in 2012:
http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_NUS_a.htm
Of course, not long along, one of the talking head geniuses on CNBC, Jim Cramer, proclaimed that we were “Flaring more gas than we are producing.” And a few months ago, another CNBC talking head asserted that the US was already a net crude oil exporter.
And so it goes.
CAM on Mon, 3rd Feb 2014 2:59 pm
The bottom line: We are flaring away vast quantities of natural gas, a finite resource, that one day in the not to distant future we will desperately need and sorely regret!
Makati1 on Mon, 3rd Feb 2014 3:12 pm
I would bet that over the last 100 years, we have flared more natural gas than we have used in everything else. Not going to change until natural gas is worth more more than the cost to build pipelines to wells to carry it away profitably.
rollin on Mon, 3rd Feb 2014 4:19 pm
The new gas to methanol converters are designed for oil site use. Why not make methanol instead of flaring?
“R3 Sciences have successfully produced commercial grade methanol in a continuous flow pilot system using a liquid, homogenous catalytic process. Advances in homogenous catalysis developed by R3 Sciences will allow the production of methanol from air-derived syngas with only trace levels of catalyst residual. The company is looking to license its technology for deployment in transportable, modular units to process natural gas at the source, providing opportunities for oil field operators to commercialize stranded and flared gas into methanol”
rockman on Mon, 3rd Feb 2014 5:20 pm
Rollin – There have been small NG-fired electricity generating system available for decades. I once fan the economics on using one for stranded NH in Kentucky right next to an aluminum mill desperate for power. Even with those demands the economics just didn’t work.
And if folks want to see a truly appalling flaring of NG just Google map the offshore Nigerian flares. Easily seen from space.
DC on Mon, 3rd Feb 2014 8:58 pm
I came across a site that estimated the amount of gas flared off (cumulatively) at about the ~ of 10 years global supply, even at current rate of consumption. Basically we’ve blown a decades worth of gas into the atmosphere. That would be a BoE (33 billion barrels of oilx10)
Repent on Mon, 3rd Feb 2014 10:10 pm
I live in a large city just North of North Dakota (Winnipeg); I pay $500.00 a month for natural gas heating in the winter.
If this gas was actually brought to the nearby market; the prices would fall and it would likely only be $250.00 per month for heat. This is price rigging, just like burning your crops to drive up the price of food- it will work but is it a sensible idea ??
Nony on Mon, 3rd Feb 2014 10:33 pm
“just Google map the offshore Nigerian flares. Easily seen from space.”
So is the Bakken…
http://sayanythingblog.com/files/2012/12/bakken1.jpg
DC on Mon, 3rd Feb 2014 10:37 pm
Sobering picture. Gas flaring looks as large(r) as major city from space.
jmm on Mon, 3rd Feb 2014 11:04 pm
dit maakt de onverantwoordelijkheid, van de bedrijven en overheid duidelijk.
Nony on Tue, 4th Feb 2014 12:31 am
but it’s just some tiny play. never amount to anything (said the people when it was 100,000 bpd, or 300,000 bpd, or 600,000 bpd). Oh…and all totally known technology and geology. No changes, no learning, no expertise, no nothing. (but then why were the leases not bought up earlier??)
Makati1 on Tue, 4th Feb 2014 3:05 am
Capitalism at work. No profit = not going to happen. I see great profits for mortuary ghouls in the future.
I have been watching “Time Team” on YouTube and they are always finding burials of all kinds. If you watch enough of their shows, (20 years worth and over 200 so far) you see how economy affects everything eventually. The Romans owned the UK for almost 400 years, until their empire crashed and then, in a few decades, their great villas and wealth disappeared all over the UK.
It was another 1,200+ years before the UK saw similar levels of culture and engineering. Their buildings were demolished and recycled into a lower culture’s buildings. The ‘Dark Ages’ are coming for today’s world also, but this time, it may be permanent.
rockman on Tue, 4th Feb 2014 3:38 am
Repent – I suspect few if any of the companies that are producing Bakken oil and flaring NG are selling other NG into your market. A company that is flaring $1 million of NG is losing $1 million worth of income as well as the state losing it’s share of production tax.
But I sure if Winnipeg paid for the infrastructure to capture that flared NG the companies would be thrilled to sell it to your town for 1/4 of the current market price. Just think how low your bill would be then.
rollin on Tue, 4th Feb 2014 11:55 am
Just make it illegal to flare, simple and workable. If they can’t work out the economics then they should go play somewhere else.
rollin on Tue, 4th Feb 2014 12:03 pm
Makatibill, as you know, most species have to face the consequences of over-using their resources and/or over-population. I guess that most animals are just quieter about it. Humans seem to noisily mill about in circles not knowing what to do or just sit there doing the same thing over and try to ignore the situation.
Would make a great comedy if it was not so sad.
I watch the ebb and flow of rabbits and deer in the area, it coincides somewhat with the ebb and flow of foxes and coyotes. As the prey populations descend the foxes and coyotes move out, some probably die and are eaten because I never find their carcasses.
Why do people think they are different? Oh, they believe the story about being in control of nature. What a laugh.
Newfie on Tue, 4th Feb 2014 7:00 pm
Never ending growth is a fairy tale.