Wyoming hopes to complete most of the steps needed to formally change its rules related to flaring of gas associated with its booming oil production, Grant Black, supervisor of the state Oil and Gas Conservation Commission (OGCC), told NGI on Thursday. It is part of a larger review of the OGCC rules.
The effort is going forward despite the fact that Wyoming's volumes of flared gas are relatively low -- less than 5% of production rather than the 28-30% experienced in North Dakota's booming Bakken Shale play, Black said. Current rules require any operator flaring more than 60 Mcf/d after 15 days of production to seek an exemption from the OGCC, and currently there are 32 such wellsites in the state, he said.
Two years ago Wyoming established its current flaring rules to include the option of charging operators royalties on flared gas (see Daily GPI, Feb. 6, 2012). This reversed the past practice of allowing flaring without royalties.
Black said issues of lost revenues for the state, wasting fuel and the environmental consequences all are factors driving the flaring review this year. To begin, the OGCC staff is conducting an internal review looking at how the other major oil/gas producing states are handling the issue, and this review in turn will be used to draft some preliminary rule changes that will be reviewed by special interest advocacy groups, stakeholders and eventually exploration and production (E&P) companies.
"I think it is very important to seek input from special interest groups that have expressed concerns about the issue," he said.
At this point there are no draft rule changes, but after a public hearing and public input process the changes will go through a formal rulemaking process, said Black, adding that the process would be similar to what the state did in formulating its new baseline water testing rules (see Shale Daily, Nov. 13, 2013).
"Obviously, the process will include an opportunity for all stakeholders to give us their input on the issue," he said, adding that this was one of the top priority rules reviews for the year. He does not have a percentage statistic on the prevalence of flaring in Wyoming, but on "shear volume basis the amount of gas flared is a pretty small number." He thinks it is less than 5%.
"We have some pretty large volumes of gas produced in the state, so the percentage flared is pretty small; I would certainly think it is less than 5%."
In addition to the economic and energy conservation issues, Black said the increased proximity of drilling to population clusters in the state also is more of an issue. "There are certain areas in the state where drilling is taking place in closer proximity to where people live, so it [flaring] has become higher on peoples' radar," he said. "If a well is drilled and there isn't anybody living for five miles around it doesn't get nearly as much attention."
While natural gas production overall has "sort of leveled off" in Wyoming, the gas associated with oil drilling has gone up, Black said. "We're also seeing a good response from midstream operators to build adequate infrastructure to deliver that gas to markets in pipelines. And there have been areas in the past where pipelines simply were not available."
Black said the infrastructure problem continues to exist, but some "substantial progress" has been made.