North Dakota’s operators have achieved a 93% natural gas capture rate statewide in September, when month/month oil and gas production increased.
In the state’s Bakken Shale, home of robust supplies of sweet light crude oil that is rich with associated gas, flaring has been excessive as production growth outpaced efforts to build sufficient midstream takeaway infrastructure over the past decade.
With flaring percentages exceeding 30% and volumes of lost gas accelerating, the state and industry worked collaboratively to establish a program of phased goals for reducing the flared supplies over a six-year period ending in November this year with a 91% capture goal.
State Department of Minerals Resources Director Lynn Helms said he was “very, very happy” with the latest capture statistics. He said North Dakota is now in a position to maintain high capture percentages.
Reaching 94% in the Bakken in September, the most recent month for complete statistics, was a “significant milestone resulting from hard work and investments,” said Ron Ness, president of the North Dakota Petroleum Council (NDPC). He said the industry has invested nearly $20 billion to build more gas gathering and processing infrastructure.
“I want to commend the state for being a strong partner with industry, especially given the difficulties we have faced this year with the collapse in prices and demand,” Ness said. “We look forward to continuing this important work to ensure responsible development of our state’s valuable resources.”
For September, oil production increased 5%, reaching 36.6 million bbl (1.22 million b/d), compared to 36.1 million bbl (1.16 million b/d) for August. Gas production totaled 84.4 Bcf (2.81 Bcf/d) in September, compared to 81.6 Bcf (2.63 Bcf/d) in August. Gas capture volumes were 78.4 Bcf in September and 75.1 Bcf in August.
Helms said this could be the last month of oil production increases for some time, although he is hoping the state can maintain numbers at or above 1.2 million b/d for most of next year. “Completions are not keeping pace with the natural [well] decline as we had only 43 completions in September, and we need 60-70 per month to keep up with the declines,” he said.
The number of shut-in wells that could be returned to production has declined. Helms said there is currently 60,000 b/d of shut-in production as a result of the pandemic. “This may be as good as it gets for awhile,” he added.
Helms said he doesn’t expect demand to return to pre-coronavirus levels until 2022. For now, North Dakota has 14 drilling rigs operating, which is between two and four more than might be economical because operators are hedging against a drilling slowdown as they prepare for President-elect Joseph R. Biden Jr.’s administration to take over in January.
Natural gas production increased as new wells were brought online.
“The great news is that the infrastructure got built, and even with a big increase in natural gas production, gas capture went above the Nov. 1 goal of 91%,” he said.
“As things go on, construction has continued on a new gas production plant west of Williston, along with a 70-mile gathering pipeline, adding initially 250 MMcf/d of new capacity. “It is exciting to be in the 90% range for capture, and it looks like infrastructure is going to allow us to stay there,” Helms said.
Drilling permit applications are “steady” at three to four daily, Helms said. He noted the tally is likely a reflection of a fear in energy policy changes with the incoming administration. Biden has pledged to ban new onshore and offshore drilling on federally owned land.
“The concern about the ability to renew or get federal drilling permits is out there,” he said.
Even though North Dakota’s oil and gas resources are mostly on private surface land, nearly half of the mineral rights ownership is with the federal government. Helms estimated that nearly 25% of all the state’s mineral rights could be impacted by a federal policy change.
“There is enough federal ownership of minerals to negatively impact future drilling if there is a federal moratorium on permits,” Helms said.
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