North Dakota's top oil and natural gas regulator on Monday outlined a new effort by the state to combat associated gas flaring at the wellhead as the amounts surged in the most recent production report.
Flaring hit its previous record level of 36% in December, the most recent numbers, at a level not seen since September 2011. Lynn Helms, director of the Department of Mineral Resources (DMR), told the state Industrial Commission the state would require beginning June 1 gas recovery plans from operators seeking new drilling permits.
A hearing is planned in the next few months to specifically look at proposed field rules and their potential economic impacts. "We want to develop a set of questions that we need to be asking [the operators] in order to make the rules work," said a DMR spokesperson. "We anticipate this being a large hearing with most of the [Bakken Shale] producers being there," she said.
Helms stressed that the intention, following the task force recommendations to Industrial Commission members (governor, attorney general and agricultural commissioner), is to reduce flared volumes, the number of wells where flaring occurs and the duration of flaring at any given well. This coincides with North Dakota Petroleum Council (NDPC) goals.
The exploration and production (E&P) task force previously outlined plans to slash the amounts of associated, or flared, natural gas over the next six years to as little as 10% from the current levels of more than 30%. The NDPC task force said its plans would take a broad stakeholder effort to meet the challenging reduction goals.
E&Ps could capture up to 95% of associated gas with "full engagement" from the commission, state agencies, the legislature, and stakeholders, the task force report said.
“Gas capture plans (GCP) should be required for future increased density, temporary spacing, and proper spacing cases,” Helms said. “They should have the added requirement of an affidavit that GCP has been provided to listed gathering companies in area.”
He told the commission that the plans would be required as part of the application for new drilling permits in order to impact the nearly 9,000 wells already approved for increased density drilling.
For existing wells where flaring is occurring, the state is proposing that large volume wells greater than 300 MMcf/d of flared gas would need to have plans in place by Sept. 1 and all other existing flaring wells by March 1, 2015.
There would be consequences for failing to submit a GCP or implement a gas capture plan, Helms said. For new permits, the lack of a GCP would result in the permit being suspended or denied, and for existing wells flaring it would result in reduced production where there is no detriment to the well or reservoir.
One of the proposed rules would limit oil production over time after the first 60 days of a well's operations until that well is connected to a gas gathering pipeline system.
"Gathering companies have indicated that they are signing confidentiality agreements with operators," said Helms. The information held by the state would be aggregated to protect confidentiality. In addition, he said DMR plans to hold semi-annual meetings (before and after the construction season) to gauge the impact of the gas capture plans.
To further help the new flaring effort, Helms has called for an Internet-based data collection system and for the state Pipeline Authority to monitor flaring mitigation activity on the Fort Berthold Reservation.
In January, DMR said flaring was inching toward the all-time high level of 36% experienced in September 2011 (see Shale Daily, Jan. 15). In February, it confirmed the record level had been reached again (see Shale Daily, Feb. 14).