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ND wants 'a better plan' on flaring natural gas

An aerial image shows a natural gas flare after sunset outside of Williston on March 12. Oil drillers in North Dakota's Bakken shale fields are losing out on more than $100 million per month in lost revenue as the amount of natural gas flared continues to balloon, despite near-universal efforts to curb the controversial practice, according to a study released July 29.

BISMARCK -- North Dakota's top oil regulator said Wednesday about 1,500 oil wells around the Oil Patch are flaring natural gas and not connected to a pipeline.

Of those, he said upwards of 450 are in such remote locations, it's unlikely they will ever get connected.

"We want to do something to encourage them to implement new well processes," said Lynn Helms, director of the Department of Mineral Resources. "We may not be able to get at the number of wells flaring, but we can affect the volume of gas flared."

Helms brought the issue before the North Dakota Industrial Commission, composed of Gov. Jack Dalrymple, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring, to get direction about clamping down on oil and gas companies that are flaring the natural gas produced from oil wells.

Last week, Helms reported that oil and gas developers flared off 28 percent of the natural gas produced in June. The percentage has come down slightly from it peak, but the overall number of producing wells in the state has been increasing.

The state's goal is to get that percentage to below 10 percent.

A recent study found that North Dakota burns off $3.6 million worth of natural gas each day and even at the 10 percent rate would flare more gas than it did in 2010. Helms said last week that he "takes some issue" with the report's estimated value of the gas.

But Helms brought up the issue of flaring Wednesday and the state's policy that allows oil companies to continue flaring and pumping oil at full potential while they get gas-gathering pipelines in place.

Operators that are flaring are supposed to reduce the amount of oil production according to a specified schedule. For example, operators could be required to reduce production to 200 barrels per day after 60 days and to 150 barrels per day after another 60 days.

Companies report to the department every six months, and those still not connected to a natural gas pipeline often request extensions to keep producing oil at the higher rate -- and continue flaring.

This month, Helms said he signed 21 extensions with another 117 requests pending.

He said it's even more important to have the conversation about flaring as oil companies are drilling more wells per oil pad.

Stenehjem couldn't agree more, adamant that the state creates a comprehensive plan to stop it.

"We need to send a message," he said. "We have to come up with a better plan than what we are doing."

He said the general public's tolerance toward flaring "is coming to an end and we need to do something about it."

He said one problem has been the pipelines are not adequately meeting the need many thought they would.

The Industrial Commission told Helms it will want companies that are flaring gas to answer why they can't get their wells connected to a gas pipeline.

Dalrymple said it's reasonable for the commission to expect companies to have a plan and an answer to that question.

Helms will spend the next month or longer speaking to oil, pipeline and gas companies about various options and consequences for imposing new regulations.

Mike Nowatzki

Mike Nowatzki reports for Forum News Service. He can be reached at (701) 255-5607.