The North Dakota Industrial Commission on Monday delayed for further study a decision on a $1.1 million state grant for a pilot project to turn flared natural gas in the Bakken Shale into fertilizer for the state’s farming industry. The three-member commission of elected officials, including the governor, wants more study of the project’s feasibility.

An official with the state Oil and Gas Research Council, Brent Brannan, told NGI’s Shale Daily that the proposal will be brought back to the commission at one of its future monthly meetings. How long that would be, he would not speculate.

In essence, the $4 million project is designed to address the state’s growing challenge of gas flaring in the midst of record-setting oil/gas production, which has made the state the nation’s second largest oil producer. The technical assessment by the oil/gas research unit was inconclusive but generally led the council to recommend the commission’s approval.

In the technical review by the council’s advisers outlined on the unit website, the project gained scores ranging from 145 to 184 points on a 250-point scale. None of the reviewers recommended against the project, one recommended funding and two others qualified their recommendations by saying the project should be considered for funding.

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. 17). 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 September.

Described as “distributed ammonia production from associated gas,” the project is headed by a New York firm, N-Flex LLC, which has outlined a pilot involving a mobile fertilizer-producing facility. The commission is made up of the state’s three top statewide elected officials — the governor, attorney general and agricultural commissioner — who were asked to approve the grant with several contingencies:

Earlier this month N-Flex CEO Neil Cohn told local news media the state grant would cover about one-quarter of the pilot project’s costs. In reaction to Monday’s setback, Cohn told NGI’s Shale Daily the delay will not cause any undue problems. “I have been waiting two years to launch this technology, so what’s another month or so.”

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.

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.