Bakken Shale

Associated natural gas production from North Dakota’s oil-focused Bakken Shale is rising as rigs are being added in the region. Bakken gas output reached a record 1.18 Bcf/d this past May. The incremental gas production in the area is intensifying competition with imports from the already-beleaguered Western Canadian Sedimentary Basin (WCSB), which share the same pipeline capacity and target the same Midwest demand markets. The trend also is prompting calls for more pipeline capacity out of the Bakken. How much more capacity is needed and by when? Today, we look at existing natural gas takeaway capacity and flows out of the Bakken.

For as long as producers have been drilling in the Bakken Shale — the oil-rich formation straddling North Dakota and Montana (plus Saskatchewan and Manitoba in Canada) — associated natural gas, an inherent byproduct, has taken a back seat to crude oil production from the play. In fact, at one point nearly 50% of Bakken’s produced natural gas was being flared, in large part due to limited midstream capacity to gather, process and move the gas to market. But that’s changed in the past couple of years. Substantial midstream capacity has been built. Flaring has eased considerably, and with the shift in drilling activity to the best, most productive acreage, the gas-to-oil output ratio has increased. Add to that rising rig counts and productivity gains in those sweet spots and that phenomenon becomes amplified. The result is that while oil production has largely stagnated this year below peak levels, associated gas volumes from the play climbed to a record high this past May. But will this trend be sustained, and, if so, what will it mean for gas flows, takeaway capacity and gas-on-gas competition at the Canadian border? Today, we begin a blog series looking at gas production trends in the Bakken and implications for gas pipeline flows as well as competing supplies.