Wednesday, February 21, 2018

New Poll: Should Production Have Precedence Over Flaring? -- February 21, 2018

A reader responded to the news yesterday that "the emergency task force" has been activated to address the issue of flaring (again). See this post.

The reader took strong issue with the need for this action, and took particular issue with the Director of the NDIC and the self-imposed flaring caps, suggesting that there seems to be a tug-of-war between someone who wants to slow production (for whatever reason) and the governor who wants North Dakota crude oil production to double (which I have said many times, if "unfettered, the Bakken can produce two million bopd").

My response to the reader:
Thank you. Agree 100% with the sentiment, but some thoughts.

I've flip-flopped on the issue many times. Early on in the boom, I thought the concern of flaring was overdone, but I was wrong -- oil companies, investors, and mineral owners have benefited -- at least as far as I can tell -- with the amount of NG activity we now have in the state.

But, whether it's 87% or 88% it seems like we've turned the corner -- and that's why I agree with your note. There seems to be a lot of hysteria over meeting the 88% goal, when outside of the reservation we seem to easily be there.

The "thing" that has me wondering now: I always thought it was the remote wells (not economical to hook up to a pipeline) and the reservation. If so, I completely agree: ridiculous to hew to self-imposed caps when much of it is due to self-imposed red tape.

But when I look at the graph and the amount of NG production predicted, I think folks are looking out over the next five to ten years. I wonder if Lynn Helms isn't telling Burgum that if we're going to get to 2 million bopd we need to prepare for all that natural gas that will be produced.

My hunch is that the "emergency" task force will come up with some great ideas: maybe it will force some changes in the bureaucracies causing all the red tape; perhaps we will see some incentives for more infrastructure investment; and, if necessary, delay the self-imposed "goals."
So, time for a poll, in which we ask whether production should have precedence over flaring:
  • yes, production should take precedence over flaring caps
  • middle of the road: ease the caps now but long term keep the caps as goals
  • no, hold the industry accountable; enforce the caps 
Note: a "yes" vote does NOT mean one wants to completely scrap policies to minimize flaring. It simply means that production takes precedence and that this "sense of urgency" that something needs to be done "now" is overblown. If that makes sense.

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