Take It Easy - Bakken Producers Get a Welcomed Reprieve on Natural Gas Flaring

Crude oil and natural gas production in the Bakken are at all-time highs, as are the volumes of gas being processed in and transported out of the play. The bad news is that for the past few months, the volumes of Bakken gas being flared are also at record levels, and producers as a whole have been exceeding the state of North Dakota’s goal on the percentage of gas that is flared at the lease rather than captured, processed and piped away. State regulators last week stood by their flaring goals, but in an effort to ease the squeeze they gave producers a lot more flexibility in what gas is counted — and not counted — when the flaring calculations are made. Today, we update gas production, processing and flaring in what’s been one of the nation’s hottest production regions.

North Dakota crude production grew by 39% between January 2017 and September 2018 to an even 1.3 MMb/d, according to the North Dakota Industrial Commission’s (NDIC) most recent numbers, and gas production was up an astonishing 62% over the same period, to about 2.53 Bcf/d. Those gains have put enormous pressure on the play’s infrastructure, and — of most interest to us in today’s blog — made it impossible for the state to meet its goals for reducing the percentage of produced gas that is flared.

Bakken flaring has been a perennial topic in the RBN blogosphere. As we said in There’s a Fire in the Night, producers in western North Dakota have been struggling with gas capture and flaring issues for the better part of the last decade. Back in 2011 and again in 2014, as much as 37% of the produced gas was being flared due to a lack of processing and takeaway capacity. That made the night sky in the Bakken resemble the greater Chicago area, and spurred the NDIC to require exploration and production companies (E&Ps) to file a “gas capture plan” (GCP) with their drilling permits and put in place flaring limits. The new rules limit flaring to one year after first production from a well, after which time producers have to do one of the following:  connect the well to a gas gathering pipeline, cap it, or link it to an electrical generator or a compression or liquefaction system that consumes at least 75% of the gas onsite. Regulators also set targets for reducing the share of produced gas that is burned off statewide: flaring no more than 26% of total gas production by November 2014, 23% by January 2015, 20% by April 2016, 15% by November 2016, 12% by November 2018 and 9% by November 2020.

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