Wyoming and North Dakota are stepping up statewide assessments of ways to cut down on the volumes of associated natural gas flaring at oil wellhead sites, but the economics for oil/gas operators in some cases are complicating the efforts.
A case in point is the Wyoming Oil and Gas Conservation Commission's (OGCC) approval earlier this month of Chesapeake Energy Corp.'s request to flare gas at five oil wells in the eastern part of the state for lack of pipeline takeaway infrastructure. Chesapeake determined that it was not economic to build a gathering pipeline system.
Longer term, Wyoming is undergoing a review of the flaring situation and initiatives to help companies get takeaway infrastructure built, a spokesperson for Gov. Matt Mead told NGI's Shale Daily.
In North Dakota, Lynn Helms, director of the Department of Mineral Resources, said during a webcast Thursday that the state's Industrial Commission will begin a discussion on flaring Aug. 19-23.
When asked about a recent Ceres' report that estimated flaring costs the state $100 million/month (see Shale Daily, July 31), Helms questioned the dollar value. "If a commodity is not salable, does it really have any value? The financial impacts as we have evaluated them would be much more significant if we were to strictly enforce production restrictions to reduce flaring."
Helms said the three-member Industrial Commission, which includes the governor, attorney general and agriculture director, is very committed to pushing flaring decreases more rapidly than what has been taking place. The percentage of flared gas was down to 28% in the most recent monthly totals; the all-time record was 36%, set two years ago.
In Wyoming, Chesapeake is required to come back in six months with another application if it intends to continue to flare the five wells, each at about 150 MMcf/d, Gov. Mead spokesperson Renny MacKay said.
"As the play moves out of the exploration phase, as we see more wells drilled, more gas can be aggregated, meaning that building pipelines and making other investments that will reduce flaring becomes more realistic," MacKay said.
The OGCC requires companies to include additional information in their applications, specifying for all wells what, if any, pipelines are in the proximity as a means of better evaluating their requests for flaring authorization. Amounts of flared gas less than 50 MMcf/d do not need commission authorization.
"This information will be helpful in determining whether flaring is the appropriate remedy," MacKay said. "This will also benefit the OGCC as it reviews all of its rules and regulations for oil and gas production."