Facing an ongoing challenge of flaring up to almost a third of its associated natural gas supplies in the oil-rich Bakken Shale, North Dakota is considering a proposal to use mobile equipment to turn some of the flared supplies into much-needed fertilizer for the state’s agricultural industry. Another proposal calls for a $1 billion farmer-owned fertilizer plant using natural gas currently being flared.

North Dakota has a goal of reducing flaring to no more than 10% of gas produced, and its energy officials emphasize that the industry’s ongoing $3-4 billion push to build new gathering system pipelines, other infrastructure and a number of new gas processing plants will start over time to mitigate the problem (see Shale Daily, Aug. 13). With crude oil production increasing by more than 400% in the Bakken during the past five years, flaring has increased too, hitting a record 36% of production last year in September.

As a result there is a lot of focus on the state Industrial Commission’s meeting Monday in which a request from a New York-based company, N-Flex LLC, for a $1 million grant to help pay for a pilot project involving a mobile fertilizer-producing facility will be considered. The commission is made up of the state’s three top statewide elected officials — the governor, attorney general and agricultural commissioner.

N-Flex CEO Neil Cohn has told local news media that the state grant would cover about one-quarter of the pilot project’s costs.

As a byproduct of the oil production boom, natural gas cannot all be salvaged because of a lack of processing plants and pipelines, although by the end of 2014 a lot of new gas gathering infrastructure is supposed to be in place. In the meantime, gas could be a key ingredient in the production of nitrogen fertilizer.

State Agricultural Commissioner Doug Goehring was quoted in an Associated Press (AP) report as saying the cost of fertilizer is soaring (up to $850/ton) and supplies from mostly foreign sources have tightened. The N-Flex proposal “has potential” to work well and benefit North Dakota, Goehring said. Gov. Jack Dalrymple and Attorney General Wayne Stenehjem have not publicly commented on the proposal.

N-Flex claims that a single oil well in the Bakken or Three Forks formations could produce enough gas to convert into more than three tons of anhydrous ammonia daily, which is enough fertilizer for 33,000 acres of wheat and 16,000 acres of corn.

North Dakota’s Commerce Department has awarded a $100,000 grant to study the feasibility of developing a farmer-owned fertilizer plant, as proposed by Fargo, ND-based Northern Corn Development Corp.

Calling for a plant somewhere in the upper Midwest, the facility backers claim the proposed plant could produce 2,200 tons of fertilizer daily using North Dakota’s oilfield gas. Both farmers and other private investors have expressed interest in the project, according to Tom Lilja, executive of the company, as quoted by AP.