Industrial Commission looking for 'big things' from flaring task force
BISMARCK -- Members of the state's Industrial Commission on Tuesday told oil industry officials studying ways to reduce natural gas flaring that bigger ideas are needed to curb the practice.
The North Dakota Petroleum Council's Flaring Task Force, which was announced last week, is made up of industry experts from 35 companies. In their first meeting with the commission, task force members said the industry is making progress to capture and utilize valuable natural gas, but production is outpacing capacity and hurdles remain.
North Dakota flared 9.4 billion cubic feet of natural gas in August, or 29 percent of the total produced in the state. Thirteen percent of that was flared because there was no pipeline connection available, while the other 16 percent was flared by wells not connected to existing pipelines because of infrastructure issues, said Justin Kringstad, director of the North Dakota Pipeline Authority.
Attorney General Wayne Stenehjem, who sits on the three-member commission with Gov. Jack Dalrymple and Agriculture Commissioner Doug Goehring, said lawsuits recently filed in four Oil Patch counties by mineral owners seeking damages from oil and gas companies for lost royalties from flared natural gas have heightened the importance of reducing flaring.
Stenehjem said North Dakota residents' tolerance for flaring "is coming to an end," adding he hopes the task force can help develop a roadmap for addressing the issue.
"We all know it's a resource that's being wasted," he said.
Task force co-chairman Eric Dille, government affairs manager for EOG Resources, said the group has met a dozen times since Sept. 11 and is in "total support" of reducing flaring. He said the group is unique in that companies that normally compete are working together to address flaring, while at the same time being careful not to violate antitrust laws.
The industry has nearly 10,000 miles of natural gas pipelines in North Dakota and has spent more than $6 billion on natural gas infrastructure since 2006, Dille said. Investments for 2014-2015 announced publicly so far amount to $775 million to $875 million, including more than 1,000 miles of gas gathering pipelines, he said.
Currently, North Dakota gas processing facilities are processing 1.1 billion cubic feet per day, enough to heat 10,000 homes for a year, he said.
The task force is studying how it can improve the permitting and siting processes for new gas pipelines and processing plants and looking at best practices that other companies may use to trim flaring, members said.
"Basically, we're looking at every step," said task force co-chairman John Paganis, commercial director for Murex Petroleum.
Dalrymple said that while he appreciates the good effort, he doesn't see current efforts and proposed new technologies to capture and utilize natural gas as enough to curtail flaring against the fast pace of production.
"We need to do a couple of big things," he said, asking if there was another natural gas processor who could be brought to the state. Dalrymple also said it's not realistic to assume the state is going to process all of the natural gas it produces, and that without a pipeline of significant size to move gas out of the region, "we're going to continue to struggle."
Petroleum Council President Ron Ness said obtaining easements from unwilling landowners makes siting gas pipelines difficult.
"I think the entire industry is stuck on that," he said.
But Dalrymple said that issue has been raised before and seems to result in talking in circles.
"We need a proposal, something we can actually work on," he said.
The task force plans to bring a report with recommendations to the commission at its January meeting.