North Dakota plans to pursue a series of innovative programs, including producing fertilizer at the well sites, to address natural gas flaring, which has risen to more than 30% in the latest monthly production totals.
New York-based firm NFlex last week received a $1 million grant from the state to pursue the first of what eventually could be up to three anhydrous ammonia fertilizer plants, according to North Dakota Department of Mineral Resources Director Lynn Helms.
“Even though we’re seeing a lot of build-out for gathering and processing [of associated gas], we are still very much in a struggle to reduce flaring in the state,” he said.
The states Oil and Gas Research Council’s grant to NFlex is one of the largest ever approved to use flared gas to produce fertilizer for the state’s agricultural sector, which could begin in the second half of 2013, Helms said.
NFlex has developed a scaled-down technology to apply single-well-sized equipment to make fertilizer near the wellhead, Helms said. “Farmers around the state report the anhydrous ammonia prices are at record highs, and they are welcoming this with open arms as we and the oil/gas industry try to reduce the flaring numbers.”
Up to three research modules are planned, with the focus on conditioning the flared gas before it goes into steel drums for anhydrous ammonia manufacturing. The modules are being built in Germany where the technology was invented, but eventually NFlex hopes to have them made in the United States. NFlex has identified two operators to begin the research projects.
Helms said he would be working with the state legislature to produce more incentives to deal with flared gas. Previous state grants for electrical generation and compressed natural gas (CNG) have been only “marginally economic,” so the search is being expanded to liquid fuels, removal of natural gas liquids (NGL) and liquefied natural gas.
“We really want to get everything on the table and provide tax incentives and royalty incentives because this is going to be a hard problem to solve,” Helms said. “Our goal is still that once the Bakken is mature and we’re producing 1 million b/d, we’re going to be producing up to 2 Bcf/d of natural gas.”
If 5-10% of that gas is flared, it would equal about all of the gas North Dakota produced in the first five years of the 21st century, Helms said. “In the drilling and [hydraulically fractured] areas, we’re doing more with less, but on flaring we really need to bring more technology to bear.”
Since progress on dealing with flared gas for power generation and CNG has been slow, these new initiatives are going to be key, Helms said. Existing efforts to extract more NGL are struggling and need royalty and other incentives, he added.
The first build-out of more oil and gas gathering, and pipeline infrastructure will be ready the end of next year, Helms said. Ultimately, North Dakota needs up to 14 100-MMcf/d gas processing plants by 2020. “We’re looking to get this flaring dynamic under control by the end of this decade.”
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