The Bakken Economy Update -- The Williston Wire -- September 26, 2014

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Ground breaking held for new $105 million waste water treatment plant in Williston. The plant is on the north side of the river, at the base of the only bridge across the Missouri River in this area, and the bridge that will be widened to a 4-lane in the next few years.

Tractor Supply opens in Dickinson (previously reported; KMart and Bonanza close.

Three years ago, Carmel Schwab sold 134 homes in the heart of the Bakken - in just one year. After relocating to Williston in 2010 to help run Aberdeen, S.D.-based Centennial Homes' first location in North Dakota oil country, she proved she had the muscle to be a tour de force in the housing market. Schwab said her family and friends thought she was crazy to move to western North Dakota, leaving behind two grown children and a comfortable life in Bismarck."I like crazy busy - that's my personality," she said. 

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The Bismarck Tribune reminds readers new flaring rules go into effect October 1, 2014. 

The first target is to capture 74 percent of the gas by October 1, 2014. This date was chosen because Oneok's Garden Creek II plant was scheduled to be constructed and ready for service at that time. Oneok announced on Aug. 26 that the 100 million cubic feet per day natural gas processing facility became operational; it is just one of the many investments being made by midstream companies to capture the gas and combat flaring in North Dakota. With gas capture goals spread over October through January 2016, the state's Department of Mineral Resources (DMR) Director Lynn Helms said the order is a continuous rollout of "increasing and tightening" flaring restrictions.

The plan to reduce flaring

The NDIC order allows all infill horizontal wells within the Bakken and Three Forks pools to produce at a maximum efficient rate for 90 days.

The first 14 days of flowback gas can be removed from the operator's total monthly volume calculation.

The following 76 days would allow an operator to become connected to a gathering facility or utilize remote capture processes in order to hit the gas capture target. If unsuccessful, the operator can face production restrictions.

The company will only be allowed to produce up to 200 barrels of oil a day if it can capture 60 percent of the gas through remote capture. If it fails to even utilize that technology, the restriction tightens to 100 barrels a day until it implements a solution.

The order delineates between the first wells on a pad and infill wells. The first wells completed in the pool can produce at a maximum efficient rate indefinitely, but those flaring totals will be considered when auditors review overall performance at attempting to capture the gas.

Allowing maximum production on the first well gives operators an opportunity to evaluate the system to determine how many wells it should drill and the necessary infrastructure.

"A lot of 8-inch pipe was laid in the ground over the last few years because we didn't do this and now we found out it was too small," Helms said. "So we don't want to compound that error."

The only exception to the rule on infill wells are those that prove to never be economic to connect to a gas facility, a scenario for just over 1,000 wells in the Williston Basin. Since most produce less than 100 barrels of oil anyway, restrictions wouldn't be necessary.

This blog was one of the first to note this and post this, by the way:

Flaring is significantly higher on the Fort Berthold Indian Reservation as it flared 33 percent of the natural gas produced in June versus an overall state number of 28 percent.

The higher percentage is due to topography and right-of-way delays.

The NDIC would prefer to see a cooperative effort with tribal leaders to enforce gas capture on the reservation, but the Three Affiliated Tribes proposed its own gas capture plan in August which requires operators to pay royalties and taxes on flared gas. The tribe feels the fees provide incentive for operators to capture the gas, but some in the industry question the motive.

I think the bottom line is this: 

• first wells on a pad: maximum production regardless of flaring
• infill wells: 6,000 bbls production/month; 60% must be captured