Natural Gas Production Projection -- August 6, 2021

From Geoff Simon:

The ratio of natural gas to crude oil being produced from Bakken wells will continue to increase, possibly doubling the state's current natural gas output in fewer than 10 years.

That was the message of Justin Kringstad, director of the ND Pipeline Authority, to members of the ND Legislature's interim Energy Development and Transmission Committee this week. Kringstad said the ratio of natural gas to oil typically starts out close to one-to-one, meaning 1,000 cubic feet of natural gas for each barrel of crude oil. But he said the ratio has been steadily climbing as more new Bakken wells are completed.

 

Kringstad said the higher gas-to-oil ratios are not unexpected. He told legislators most new wells today are being drilled in areas where a "parent well" already exists, which means the pressure that holds natural gas in the reservoir has already been reduced.

Click here to listen to Kringstad's comments.

.... the high case of which could have the state's natural gas production approaching seven billion cubic feet per day. The state's output as of the month of May was just under three Bcf per day.

Graphic:

Also from Geoff Simon:

Last year's pandemic-related downturn in oil and natural gas production provided midstream companies some relief in the pace at which new natural gas processing and takeaway capacity was needed. But increasing gas-to-oil ratios mean they will need to return to construction mode quickly.

Helms said the accelerated schedule won't provide midstream companies adequate time to get new processing and takeaway capacity permitted and constructed, but he said tax incentives enacted by the 2021 Legislature will encourage innovative methods of using the additional natural gas. 

SB 2328 established a credit against the oil extraction tax to incentivize use of onsite flare mitigation systems in production operations. The credit is equal to $0.75 per one million BTUs of flare mitigation that results from operating a flare mitigation system on a qualifying well. Credits are capped at a maximum of $6,000 per well per month, for as many as 12 months.

Helms said he's also seeing increased interest in using natural gas and gas liquids to generate electricity.