Producers in the Bakken region made substantial progress in 2014-15 in reducing the volume and percentage of gas that was flared or burned off, but those gains stalled in 2016, and flaring has actually been on the rise through much of 2017. Due to an unfortunate confluence of events (gas processing plant and pipeline issues among them), 16% of the gas produced in the Bakken in September was flared, marking the first time producers failed to meet the state’s ratcheting-down target for gas burn-offs. The October and November flaring numbers are expected to improve, but there are worries that without more processing capacity, Bakken producers will have trouble achieving the North Dakota flaring target when it drops to 12% (from the current 15%) in November 2018. Today, we discuss recent developments in Bakken gas production, gas flaring and gas-related infrastructure.
One of the most enduring images of the Shale Era is a photograph of North America from a NASA satellite that showed western North Dakota shining as brightly in the nighttime sky as major metropolitan areas like New York City, Los Angeles and Houston. But it wasn’t streetlights and stadiums that lit up the Bakken region; it was the flaring of vast volumes of associated gas that was being produced at crude oil-focused wells. The burn-off of more than one-third of Bakken gas production wasn’t just wasteful, it hurt producers’ bottom line and it gave the Shale Revolution (and the Bakken in particular) a public-relations black eye — a real shiner. As we said a while back in We Did Start the Fire and (Fewer) Candles In The Wind, getting a handle on flaring proved to be especially challenging in the Bakken, given its remote location and the fast pace of oil and gas production growth there earlier in this decade. In September 2011, with oil (and associated gas) production in the Bakken on a tear and gas gatherers and processors struggling to keep up, the percentage of produced gas that was flared peaked at 36%. Something had to be done, and it was. Since June 2014, the North Dakota Industrial Commission (NDIC) has required exploration and production companies (E&Ps) to file a “gas capture plan” (GCP) with their drilling permits. Flaring now is limited to one year after first production from the well; after that, the well has to be either connected to a gas gathering pipeline or capped. As an alternative, the well can be linked to an electrical generator or a compression or liquefaction system that consumes at least 75% of the gas onsite. As shown by the blue line in Figure 1, NDIC also established a glide path for reducing the share of produced gas that is burned off statewide: the targets call for reducing flaring to 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 — the last two highlighted in the graph by orange circles. The purple line in Figure 1 shows the percentage of total gas production that has been flared.