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North Dakota Flaring Stubborn; Production Up 5%

Concerns about activity on Native American reservation lands and a major processing plant's bottleneck kept North Dakota's wellhead associated natural gas flaring from falling in June, and the state's top oil/gas regulator expressed some frustration Friday about that in reporting a 5% uptick in oil and gas production for the most recently completed reporting period, June.

Oil production hit 32.77 million bbl, or 1.09 million b/d, in June, compared to 32.2 million bbl, or 1.04 million b/d, a month earlier. Natural gas production was 37.5 Bcf, or 1.25 Bcf/d, for the same month, compared to 36.9 Bcf, or 1.19 Bcf/d, in May. Lynn Helms, director of the state’s Department of Mineral Resources, characterized the results "picking up the pace a little."

Helms, however, was somewhat somber about the flaring situation, which remained at 28% in June -- the same as May -- after the state's requirement for gas capture plans for new well permits kicked in June 1 (see Shale DailyJune 2).

Of concern is that flaring on the federally managed Fort Berthold Reservation, where one-third of the state's production takes place, is markedly higher than the rest of the state, and the state's expanded Tioga gas processing plant continues to operate well under capacity because of a nagging pipeline bottleneck.

"I had a meeting Tuesday with tribal officials, so hopefully we can work out any differences [Native American tribes have their own gas capture plans (see Shale DailyAug. 11)] in trying to manage flaring and move forward with a plan that gets us there," said Helms, adding that recent additional data shows the Tioga plant operated at only 59% capacity in June.

The bottleneck there is a need to expand gas gathering by building a new pipeline across a lake to the south, using an old gas pipeline right-of-way, Helms said. "But because of permitting rules required an archaeology survey, a permit for that work had to be processed first and they are still waiting for the permit to do the pipeline mechanical work.

"That highlights some of the difficulty in reducing flaring from what looks like a small project over lands that had already been disturbed. Nevertheless, you get into a right-of-way and permitting process that just seems to go on and on and on. As a result, you wind up with a major asset operating at less than 60% of its capacity."

Helms thinks if Hess Corp. can get the Tioga processing plant to full capacity by the end of the summer, there could be some "significant progress" made on  the state's flaring problem. The Hess plant expanded from 100 MMcf/d capacity to 250 MMcf/d (current nameplate), but in June it processed 147 MMcf/d, said Helms, adding that if the added pipeline gathering can get completed, it alone, would add 50-60 MMcf/d of capacity.

Along with continuing to audit gas capture plans and meet with major midstream companies in the state, Helms said in response to a news media question on his production webinar that his next step in ironing out differences between the state and Fort Berthold gas capture plans is to meet with North Dakota's attorney general to determine what the legal jurisdictional issues are.

"I'll be meeting with [Attorney General Wayne Stenehjen] next week to try to sort out exactly where the state Industrial Commission, the tribes, the U.S. Bureau of Indian Affairs, and Bureau of Land Management jurisdictions stand, and who does the state need to come to an agreement with in order to get on the same page with gas capture plans and flaring production plans," Helms said.

With some frustration, Helms said the tribes are working on their own gas capture plan and it is "quite different" than the state's, requiring that the state and federal players sort out the jurisdictional issues first.

Helms acknowledged that it is difficult to manage the state plan, with its specific deadlines for reaching reduction goals, with the activity on Fort Berthold operating under a separate plan and goals. "There are overlapping jurisdictions involved," he said. "We may end up with different techniques applying to different parcels of land."

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