North Dakota gives teeth to flaring reduction plan

North Dakota operators that fail to meet the state’s flaring reduction targets may soon be forced to curtail oil production from wells targeting the Bakken and Three Forks formations, according to an order issued July 1 by state regulators.

The order is the enforcement mechanism for the state’s flaring reduction plan, which was approved in March by the North Dakota Industrial Commission.

Beginning Oct. 1, wells in the state could be subject to potential production curtailments if the amount of flared gas exceeds the state’s gas capture target.

Speaking to a press conference on July 1, Lynn Helms, director of the state’s Oil and Gas Division, said most Bakken operators are already in compliance with the flaring reduction targets. But, “there’s some, a handful, that are really going to need a lot of wellsite technology.”

Aggressive targets

The first deadline for the flaring reduction plan is fast approaching. The state expects to capture 74% of gas production by Oct. 1, rising to 90% by Oct. 1, 2020.

According to Helms, wells where only 60% of associated gas is captured could be subject to a cap of 200 b/d of oil production, and wells that collect less than that amount could see production capped at 100 b/d.

There are no exceptions for wells that are connected to gas gathering systems with insufficient capacity. In April, about two thirds of flaring came from connected wells.

The state does provide leniency in areas where leasehold is not held by production. In these areas, the first well drilled in a spacing unit is permitted a 14-day initial flowback period during which it can flow at an unrestricted production rate and another 76 days of maximum efficient production regardless of whether it is connected to a gas gathering system.

This will enable producers to collect the information needed to make planning decisions about future wells and infrastructure needs in the spacing unit.

North Dakota oil production surpassed a record 1 million b/d earlier this year. It is now the second-largest oil producing state in the US, after Texas (OGJ Online, July 1, 2014).

More than 1 bcfd of gas is produced in North Dakota, most of which is associated gas from oil wells targeting the Bakken and Three Forks formations. A lack of gas gathering infrastructure has led to high amounts of flaring. State statistics show that 30% of gas production was flared in April.

A key aspect of the state-wide flaring reduction plan, which went into effect on June 1, requires producers to submit a gas capture plan with every application for a permit to drill a new well. The plans are designed to improve communication between producers and midstream companies and promote better planning for gas system needs.

As of July 1, the Oil and Gas Division had received 136 permit applications with gas capture plans. Of these, 27 had been approved.

Mobile solutions

In areas with insufficient infrastructure, producers may gather, process, and utilize surplus gas at the wellsite to meet flaring-reduction targets.

There are several relatively new technologies available to help producers meet flaring reduction targets. Among them are GE’s CNG In A Box, a mobile system the size of a shipping container that compresses gas into CNG at the wellsite for use in bifuel rigs, vehicles, and other equipment. A partnership between Gtuit and Corval Group offers similarly sized units capable of extracting NGL from the gas stream at the wellsite.

David Reif, vice-president of business development for Corval, said Gtuit’s technology enables producers to bridge the gap until permanent gas gathering infrastructure is installed and manage high gas flows during the initial production phase.

Statoil North America Inc. is pilot testing the CNG In A Box System and Hess Corp. is expanding its use Gtuit’s mobile NGL extraction system.

Contact Rachael Seeley at rachaels@ogjonline.com.

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