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North Dakota seeks solutions to excess gas flaring, including possible petchem investment
12 November 2019IHS Markit Energy Expert
With natural gas production at or near record highs and flaring
continuing to be far above the state's limit of 12%, the North
Dakota Industrial Commission (NDIC) issued two announcements
related to its efforts to reduce flaring and maximize the value of
natural gas and NGLs that are co-produced with the state's oil
production.
On November 15, NDIC will hold a public hearing for stakeholder
comments on improving its gas capture strategy and what it called
"regulatory clarity needed around gas gathering agreements."
NDIC is seeking to avoid service interruptions on gathering
pipelines, which have been the cause of some of the flaring
exceedances in the last two years.
NDIC's other announcement, made on October 28, is to fund a
$300,000 study to determine if the composition of NGLs produced as
a byproduct of oil drilling changes over the life of a well. The
study will be used to assess the feasibility of construction of a
petrochemical plant in North Dakota, said Pipeline Authority
Director Justin Kringstad.
A report is expected by May 1, 2020.
Gas gathering meeting
In announcing the gas gathering public hearing, NDIC noted that
in August 2019 the state captured a record amount of gas, on its
way to breaking the 3 Bcf/d production volume for the first time
ever (see article).
"This captured volume [2,435,760 Mcf/d] is close to 150% more
than what was being captured just five years ago as a result of
over $4.7 billion of infrastructure expansions in gas gathering and
processing on behalf of industry. However, the potential exists for
the state to capture an additional 271,172 Mcf/d," said North
Dakota Department of Mineral Resources Director Lynn Helms.
"Reviewing the application of this existing statute is a step in
the right direction that could clear a path forward for more gas
gathering infrastructure which can be used safely and efficiently
to its fullest extent."
One question for stakeholders will be if the state's
non-discrimination statutes for gas gathering pipelines, created
under North Dakota Century Code 38-08-06.2, are affecting North
Dakota's ability to capture natural gas to its fullest extent. As
NDIC explained, the most common contractual arrangement in the
state is one with interruptible capacity through which a shipper
has no guarantee or right to transport gas on a system. But this
can lead to "unreliable gathering capacity, increase in well
shut-ins, and an increase in flaring," NDIC said.
The less common contractual arrangement is providing a shipper
with firm capacity. "However, the current regulatory framework is
not clear on whether providing firm capacity to producers would be
in violation of existing non-discrimination statute or how
'discrimination' is defined," NDIC said, and it's seeking public
input.
