The state is so far keeping its present gas capture goal of 88 percent, but will give the industry more flexibility when it comes to meeting that goal.
“It might appear that there could be some additional flaring going on with the leniency of some of these (changes),” said Bruce Hicks, Asst. Director of Mineral Resources Oil and Gas Division. “But one thing to keep in mind is that the midstream projects out there that are going on were justified by the current production rates of wells. Curtailing that now could put those projects in jeopardy.”
The state’s new goals will focus on increasing the volume of captured gas, rather than lowering flared volumes, and incentivizing investment in infrastructure, rather than a reduction in the number of wells that are flaring.
“If the wells that are flaring are low producers, we shouldn’t really have an issue with those,” Hicks said. “It’s more the total volume they are worried about. So the (North Dakota Industrial Commission) wanted to make sure they are incentivizing the investment in gas capture infrastructure.”
Hicks said they also want to encourage investment in value-added projects, as well as infrastructure. This could include a petrochemicals plant, electrical generation, greenhouse projects, or use as rig fuels or for heating hydraulic fracturing water.
“There are a lot of projects out there that can use the gas in a beneficial way,” Hicks said. “Instead of selling the gas, use it.”
The commission will also allow more reasons for removing gas volumes from the state’s gas capture goals.
“A lot of gas processors now are implementing a rolling capacity curtailment,” Hicks said.
That refers to a practice of taking turns curtailing production from the producers in the system each week or month.
“They are going to be rolling, so it will affect everyone at some point,” Hicks said. “this is beyond the control of the operators. And since they have gone through and connected their wells to the system, we don’t believe it is fair to now punish them on the other end.”
Wells in townships outside the Bakken core will also be able to subtract their volumes. That’s intended to allow the companies to show the volumes, to help prove that the wells are worth connecting to a gas capture system.
Producers will also be able to subtract flared volumes if the flaring was caused by another operator hooking onto the system. The new wells can pressure up the overall system, forcing other lines to flare.
“We believe a lot of those will be low volume wells, but you shouldn’t punish the operators from that,” Hicks said.
Volumes placed into storage or used for enhanced oil recovery will also not be part of the flaring calculation, but must be documented with the Division of Oil and Gas.
The state’s review of its gas capture goals followed on a fifth month straight of missing its gas capture goals.
North Dakota’s gas production hit a record 2.532 billion cubic feet per day in September, according to the October production report, but it also flared 431 million cubic feet per day of that. the statewide gas capture was just 83 percent — short of the 85 percent goal in place at the time. That goal moved to 88 percent in November.
Helms recommended putting off the increase to 88 percent two years, but the Industrial Commission decided to wait and see how new federal regulations will affect things on Fort Berthold, where capture rates have been just 71 percent. The BLM is going to defer regulation of methane emissions to tribal and state governments.
Hicks said the huge volumes of gas being flared in North Dakota were due to the combination of better technology and more wells being drilled in the core. During the downturn, many rigs moved into the core of the Bakken to dril. It is more economic to drill in the core, but gas-oil ratios are higher.
Companies also pushed for more efficiency to make it through the downturn, and found new and better ways of completing wells, generating more production at less cost.
“Better wells being completed means more oil, and more oil means liberating more gas out of that oil,” Hicks said.
That caused gas production to follow the high case scenario developed by the state’s Pipeline Authority Justin Kringstad, while rigs and well completions followed his lower case scenario.
“That really surprised him and everyone else,” Hicks said.