WATCHING GOVERNMENT: Programs aim at gas flares

Dec. 18, 2006
Critics may consider the idea of environmentally aware oil and gas producers an oxymoron.

Critics may consider the idea of environmentally aware oil and gas producers an oxymoron. Others who are willing to take a closer look quickly learn that it’s an increasingly vital part of the business.

An example is the worldwide emphasis on using instead of flaring associated gas.

A leader in this effort is Global Gas Flaring Reduction (GGFR), a partnership of government agencies and oil companies led by the World Bank and International Finance Corp. The group was scheduled to hold a forum on flaring reduction and gas utilization Dec. 13-15 in Paris.

In early November it announced that a project in Nigeria, which leads the world in reported flared gas, would be the first in the African nation to put associated gas to work generating electricity. GGFR officials would like to see many similar efforts.

Flaring in US

It’s hardly surprising that much flaring involves stranded gas in developing nations. But I was surprised when Rashad Kaldany, director of the IFC and World Bank’s oil, gas, mining and chemicals department in Washington, DC, said gas is still being flared in Canada and the US. “Most of the flaring in the US is at small onshore wells regulated by states,” he told me.

That led me to the Interstate Oil & Gas Compact Commission, which put me in touch with Lynn D. Helms, director of the industrial commission in North Dakota’s Department of Natural Resources.

“We’ve had a program since 1985, when the state legislature passed an antiflaring law. It said that if a producer is going to flare a well, he has to get an exemption from the industrial commission and still pay royalties on the flared gas,” he explained.

Producers flared 20% of their gas in North Dakota before the law took effect more than 20 years ago, he said. Now, the level is 2-4%. “In 20 years, we reduced our gas flaring by 90%. The big reduction happened quickly-within 2 years of the law being passed,” said Helms.

Some exceptions

He said that for operators in North Dakota to obtain an exemption, they must demonstrate that they can’t get a 10% rate of return from laying a sales line and processing the gas. There are provisions for emergency situations, such as shut-downs when a plant is closed.

Also, when a new well comes on production, the operator is allowed to flare for 2 months while testing.

Helms said North Dakota’s flare rate has been around 2% until recently, when several projects have had nitrogen breakthrough problems. One producer is building a $75 million plant, which should be running by the end of January, to separate the gas and nitrogen.

“That should give you an indication how hard our producers are working to not flare gas,” said Helms. Or, basically, producing with flair instead of flares.