Flaring -- August 16, 2019

From twitter this morning.

Again, the important graph is missing: radiant heat / production ratio. It looks like that ratio might actually be down.

I thought it interesting that the "Bakken [is/was] in full panic mode." Google search revealed .... nothing. The textbook on the shale revolution -- which will probably be the "shale bible" does not have "radiative heat" in the index. That book will be released on August 21, 2019.

By the way, an alternative spelling for "flaring": "opportunity."

Any permit for a greenfield plant to help manage this problem will be approved by the NDIC in a "New York minute."

Director's Cut, June, 2019, data, posted here. North Dakota sets all-time crude oil and natural gas production records.

Flaring In The Bakken: The Big Story #0OTT Missed -- August 15, 2019

Updates

August 16, 2019: one day later, #OOTT re-tweets it. 

Original Post 

From the Director's Cut for June, 2019, flaring:

• with natural gas at $1.77 / mcf (it was $.195 last month), the oil-to-gas price ratio at Watford City, ND, is 25 to 1
• statewide gas flared volume increased 154,966 mcfpd month-over-month (it decreased month-over-month in May, 2019, so this increase is disturbing)
• produced, April, 2019: 2,833,131 mcfpd
• produced, May, 2019: 87,471844 mcf for the month
• produced, May, 2019: 2,821,672 mcf/day
• produced, June, 2019: 86,330,660 mcf/month
• produced, June, 2019: 2,876,689 mcf/day
• 57,246 / 2,876,689 = about 2%; last month it was 0.554% or about half a percent; so in one month we went from half a percent to a 2% increase in production of natural gas
• capture rate:
• statewide capture: 76% (last month: 81%)
• non-FBIR Bakken: 80% (last month: 85%)
• FBIR Bakken: 63% (last month it was 69%)
• goals: a capture rate of 88%

Glad to see the BLM all over this one.

I have no idea what the "new rules" regarding flaring are but if interested, there is a tag, flaring_new rules.

Time to build that petrochemical plant. The amount of natural gas production is only going to increase.

Flaring In The Bakken -- May, 2019, Data

See comments below. Reader provides link to podcast regarding the Bakken:  https://twitter.com/RTDukes/status/1144670377597112321.

From the Director's Cut for May, 2019, flaring:

• with natural gas at $1.95 / mcf, the oil-to-gas price ratio at Watford City, ND, is 25 to 1
• statewide gas flared volume decreased 15,700 mcfpd month-over-month
• produced, April, 2019: 2,833,131 mcfpd
• produced, May, 2019: 87,471844 mcf for the month
• produced, May, 2019: 2,821,672 mcf/day
• 15,700  / 2,833,131 = 0.554% or about half a percent
• capture rate:
• statewide capture: 81%
• non-FBIR Bakken: 85%
• FBIR Bakken: 69%
• goals: a capture rate of 88%

Glad to see the BLM all over this one.

I have no idea what the "new rules" regarding flaring are but if interested, there is a tag, flaring_new rules.

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Working On Her Multiplication Tables

Turned five years old about two weeks ago.

Without Question, The Big Story In February, 2019, Director's Cut -- Flaring -- April 13, 2019

The February, 2019, data is posted here.

Ever since the Bakken boom began, the flaring issue has been most problematic on the reservation.

Some months ago, the state threw in the towel and relaxed the rules.

Prior to relaxing the rules, the percent of produced natural gas captured on the reservation was not too far different from that of the rest of the state.

The state goal is to capture 88% of produced natural gas, a compromise between what the faux environmentalists would like and the oil companies would like. Don't take that out of context. The oil companies have their "goals"; the faux environmentalists have their "goals." The former measures success in dollars and cents; the faux environmentalists measure their success differently, but certainly not in dollars and cents. Do not take that out of context. The regulators have to thread the needle using different parameters when setting standards, goals, regulations. Not an easy task.

We've had this discussion before.

Wow, a digression. All I wanted to say is that the state was approaching success in meeting their goal to capture 88% of produced natural gas. But the reservation is the laggard. Last month, the reservation captured 71% of produced natural gas. I thought that was an all-time (recent) low and couldn't get lower. Boy, was I wrong. In February, 69% capture rate.

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For The Record

Flaring Rules Update: NDIC Has Approved Amendments For Flaring Policy -- November 20, 2018

From The Bismarck Tribune: NDIC to give oil industry more flexibility on flaring. Just in time -- considering the slump in oil prices.

... changed the goals of the gas capture policy first adopted in 2014 to focus on increasing the volume of captured gas rather than reducing the flared volume.

Commissioners also dropped the goals of reducing the number of wells flaring and reducing the duration of flaring. Instead, they added a goal of incentivizing investment. 

the Industrial Commission further expands the number of circumstances that allow a company to be in compliance with the gas capture policy even if the company’s flaring rate exceeds the benchmark.

The gas capture target increases to 88 percent for natural gas produced in November, which will be reported in January.

Director of Mineral Resources Lynn Helms recommended that commissioners postpone the 88 percent gas capture requirement for two years.

However, the commission stopped short of changing the timeline in anticipation of a change to the way flaring is regulated on the Fort Berthold Reservation. The Bureau of Land Management plans to defer regulation of flaring on trust lands to the Mandan, Hidatsa and Arikara Nation starting early next year.

Maybe someone else can provide "specific, actionable" changes. I certainly didn't get much from the NDIC press release or the news story.

NDIC screenshot.

Why I Love To Blog: The Bakken Never Ceases To Amaze Me -- Another Incredible Story -- Read Between The Lines -- October 26, 2018

This is one of those stories that can't help but catch your attention if you've been following the Bakken closely. Spend some time reading between the lines. At The Bismarck Tribune: North Dakota regulators plan review of natural gas flaring rules.

See this post to see natural gas production as percent of total boe (crude oil + natural gas produced in North Dakota). 


Archived.  

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Proposition 112 in Colorado

See this note. All of a sudden, I'm starting to get interested in this story. But as much as I would like to write the "tale of two states" I will control my maniacal tendencies.

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Stories That Fascinate Me Right Now

The top three energy stories that fascinate me right now

• Proposition 112 in Colorado
• Saudi Arabia -- the Crown Prince's recent investment conference was a dud
• News today that the NDIC is raising the flaring issue once again

Flaring issue in the Bakken

• Texas Permian has the same problem -- oilprice.com
• better data at DallasNews 
• fluff piece from Forbes
• mentions 0.5% flaring, Houston Public Media
• the flaring eased and leveled off during the "Saudi Surge"
• perhaps we should stop development in the reservation until flaring there is "under control"
• perhaps we should encourage Saudi Arabia to flood the world with oil 

Wow, look at the increase in natural gas production in the Permian. Incredible.

• EIA pdf, Bakken: https://www.eia.gov/petroleum/drilling/pdf/bakken.pdf. 

• EIA, pdf, Permian: https://www.eia.gov/petroleum/drilling/pdf/permian.pdf.

1% waste in the Permian? I wish state governments and especially the federal government were so efficient with our tax dollars. 1% waste in the Texas Permian .... and the industry is responding ...

North Dakota Oil Industry Still Studying Flaring Challenge -- April 15, 2018

See this post to see natural gas production as percent of total boe (crude oil + natural gas produced in North Dakota).

From the Director's Cut for February, 2018, data:

Natural gas production increased slightly, setting a new all-time record:

• February: 2,102,266 MCF/day (350K boepd)
• January: 2,071,820 MCF/day

Flaring:

• statewide, 88% capture
• statewide, Bakken: 89% capture
• FBIR Bakken: 87% capture
• ND goal: currently 85%
• ND goal: will increase to 88% capture in November, 2018; increasing to 91% beginning November 1, 2020

Now, this, from The Bismarck Tribune:

North Dakota’s oil industry is advocating for the state to keep its current gas capture targets but make some tweaks to the policy that regulates natural gas flaring.

North Dakota oil production held flat in February at 1.17 million barrels per day while natural gas production hit a new record at 2.1 billion cubic feet per day, according to preliminary figures the agency released Friday.

Flaring decreased from 310 million cubic feet per day in January to 256 million cubic feet per day in February. Companies captured 89 percent of Bakken gas produced statewide in February, exceeding the state’s requirement of capturing 85 percent.

The state requirement is set to increase to 88 percent in November, a level regulators and industry leaders had cautioned could be difficult to meet as natural gas production is expected to continue breaking records.

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.

This Stuff Is So Easy To Miss -- Thank Goodness For Twitter -- December 8, 2017

From Argue Media today: the United States under Trump suspends federal flaring restrictions until 2019. Wow. So many story lines, but right now, the data points:

• the rule would have required oil and gas producers on federal land to limit flaring and methane leaks starting a month from now (specifically, January 17, 2018)
• the US BLM said it was delaying compliance -- stating the rule would create a particular burden to marginal wells and threaten their economic viability

This following is true. We saw this phenomenon during the Bakken boom:

US producers sometimes flare natural gas so they can maximize production of more valuable oil, particularly in booming shale areas where gathering pipelines either do not exist or at full capacity.

Producers also sometimes lose natural gas directly into the atmosphere if they lack leak detection programs or install high-emission equipment.

It seems that some states, like North Dakota, have a pretty good handle on this.

The BLM was not only concerned about the economic viability of marginal wells, but like so many Obama-era rules, it was thought by the BLM that this rule would not "stand up to judicial review."

After that, a lot of global warming nonsense, as if one can monetize CO2 emissions affect on global warming. Especially since there is no correlation.

Saturday Morning -- August 12, 2017; $10,000 Bonus For Bakken Mineral Acre?

Active rigs:

	8/12/2017	08/12/2016	08/12/2015	08/12/2014	08/12/2013
Active Rigs	57	33	72	194	184

ND State lease auction, August, 2017: results have been released. I will post summary later. This one was certainly an outlier:

• OG1700657, Williams County: 154-101-23, Lot 10, BK1 of Ledosquet addition to the city of Williston, Lynx Oil Company; 0.16 acre (no typo); $10,030 / acre (no typo). 
• 0.16 * $10,000 = $1,600 for the parcel?
• 0.16 acre. Imagine how many similarly-sized parcels exist in the better Bakken?

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Flaring On The Reservation

Flaring: apparently it's okay to flare on land owned by Native Americans. I posted this yesterday after the Director's Cut was released:

Natural gas capture:

• statewide: 88%
• FBIR: 79%
• goal: 88% through October 31, 2020; then 91%
• comment: the trend continues -- large amount of flaring on BLM land

Today The Bismarck Tribune reports that "state officials are concerned." The article begins:

Flaring on Fort Berthold Indian Reservation increased for the third month in a row, raising concern with state officials.

“You see a real problem developing on Fort Berthold,” said North Dakota Department of Mineral Resources Director Lynn Helms during the department’s monthly report on oil production data Friday.

While the capture, rather than burning off, of natural gas at well sites statewide was at 91 percent, it was only at 79 percent on trust lands and 81 percent on fee lands, Helms said.

“Up until three months ago, it was matching the statewide numbers but, beginning in March or April, you started to see them fall seriously behind,” he said. “It’s pulling the statewide average down quite a bit.”

This becomes a problem as caps on statewide flaring go into effect Nov. 1, and, at the current rate, it will be bumping up against those maximums allowed.

The native Americans say that figures are misleading.

State says this:

Helms said the tribe has been really good with its own pipeline permitting process but blames the issue on difficulty getting federal approval for construction of gas transmission pipelines.

He said there are two significant gathering lines that were held up by the U.S. Bureau of Indian Affairs approval process. After three years, one was just recently approved for a right of way this year. The other remains in the lurch.

One bright spot is a proposed new gas processing plant southeast of Watford City to be built by Arrow Field Services, according to Helms. The company gave notice of plans for a 200 million per day facility to the DMR but it still has to file for a permit from the North Dakota Public Service Commission.

The company hopes to start construction next spring, Helms said. When complete, it will take in gas from the western third of Fort Berthold.

Fox said he has no doubt there are delays at the federal level and the tribe is doing its best to work through the federal rules. He suggested one way to speed up the process of development in Indian country is to give the tribe more control over its lands, creating both improvements to pipeline permitting and flaring numbers.

“This would really relieve stress in the Mandaree district,” Helms said.

April, 2017, Production Data Has Been Posted; Production Exceeded Expectations: Natural Gas Production Hits All-Time Record -- June, 2017, Director's Cut

The Director's Cut for April, 2017, data has been posted. North Dakota crude oil production increased by 2% month-over-month.

From the Director's Cut: both DUCs and inactive well count increased. It is the inactive well count in this case that is most interesting; despite more wells going inactive, the total production increased 2%.

• Estimated wells waiting on completion is 830, up 141 from the end of March to the end of April. 
• Estimated inactive well count is 1,466, up 167 from the end of March to the end of April. 

The Bismarck Tribune story here. Data points:

• exceeded expectations
• natural gas production hits an all-time time as operators focus on the core care of the Bakken
• average production: 1.05 million bopd 
• natural gas production: jumped 6% to more than 1.8 billion cubic feet / day -- a new record
• Lynn Helms: 55 is like the peak (number of active rigs in North Dakota) for 2017
• overall flaring: 10.4%; concerning is that federal delay in pipeline permitting makes capturing gas difficult on the reservation; current 15% of natural gas the reservation is flared
• 70% of ND oil was transported by pipeline in April, up from 58% in March
• cost benefits of DAPL won't be seen for 6 months or so (contracts, etc)

Reuters reports the story here. My favorite line in the Reuters story:

North Dakota regulators said in a statement they expect oil prices to be weak through at least October. OPEC members last month agreed to maintain their own production cuts, though rising output in states like North Dakota has been offsetting the cartel's moves.

Graphs at outrunchange here.

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From The Director's Cut

Oil production

• April, 2017: 1,050,630 bopd
• March, 2017: 1,025,690 bopd
• Delta: +2.4% or + 24,940

Producing wells:

• April, 2017: 13,717
• March, 2017: 13,693
• Delta: +24 wells or 0.18%

Permitting

• April, 2017: 58
• March, 2017: 93

Oil price:

• today: $35.50
• May: $37.85
• April: $39.86
• March: $38.13

Rig count:

• today: 55
• May: 50
• April: 50
• March: 46

Wells not producing:

• waiting on completion: 830; up 141 from the end of March to the end of April
• estimated inactive well count: 1,466; up 167 from the end of March to the end of April

Takeaway capacity:

• remains dependent on CBR to coastal refineries

NDIC Gives Operators An Extra Year To Bring Their DUCs On-Line; Flexibility On Flaring Also Announced -- October 22, 2015

It is "funny" (as in coincidental) how things turn out ... just the other day I mentioned the "one-year-rule" for bringing North Dakota wells on line. And here we are today, it's just announced that North Dakota will extend the deadline by a year. From Seeking Alpha:

• North Dakota regulators approve a plan to give oil producers an extra year to bring a new well online, Reuters reports, in an attempt to give the energy industry breathing room during the oil price downturn.
• Companies will now have up to two years to frack drilled but uncompleted wells under changes approved by the North Dakota Industrial Commission, which means the oil industry will not be forced to spend billions of dollars to frack an estimated 1,000 DUCs, most of which will hit their previous one-year deadlines in December.

Also, in The Dickinson Press link below:

In December through March (2016), about 100 wells per month will reach the one-year deadline.

Under the policy approved Thursday, operators can apply to have those wells put on temporarily abandoned status, giving them another year to store the oil in the ground. Royalty owners, land owners and nonoperating interest owners would have the opportunity to object.

Helms said he expects about 500 wells will be put on temporarily abandoned status, which will prompt a gradual decline in oil production from 1.19 million barrels per day to 1.1 million barrels per day at the end of the biennium in June 2017.

Most experts anticipate that oil prices will recover in 2017, Helms said.

“The state would prefer to tax the oil at a higher price at some point in the not-too-distant future as opposed to taxing it today at low oil prices,” Helms said.

In addition, the NDIC granted some interesting flexibility on the issue of flaring. The Dickinson Press reports:

The North Dakota Industrial Commission adopted new policies Thursday to reward oil companies that exceed their gas capture goals and to allow producers to store oil in the ground until prices recover.

Companies that exceed gas capture goals for 90 days can bank credits for volumes of gas captured and apply them to future months if they fall below the benchmarks.

Helms, who recommended approval of the policy, said credits can only be used if a company encounters extenuating circumstances, such as delays getting right-of-way approval for pipelines or if a gas processing facility is down for maintenance.

The policy aims to motivate companies that are barely making the gas capture target, which is currently 77 percent, to raise the bar so they get credits in the bank, Helms said.

The credits expire after three months and they can’t be transferred to another company.

The policy, which originated as a request from an industry task force, takes effect Nov. 1.

Helms said he anticipates companies to take advantage of the program in the winter, when maintenance issues are more common.

And more:

Last month the Industrial Commission adopted revised gas capture goals that gave the industry an additional 10 months to meet the 85 percent gas capture goal.

In addition, commissioners voted unanimously to grant another six-month exemption from the natural gas flaring policy to XTO Energy for 102 wells, primarily in Dunn County. The commission granted an exemption to those wells in April after a pipeline project failed to move forward. (We've talked about this before.)

The Bear Creek natural gas processing plant under construction by ONEOK will serve those wells and is expected to be complete in fall of 2016.

For me this is the big story: again, operators, royalty owners, surface owners, and the state are working together during a very, very tough time. Good for them; I'm proud of the state.

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COP Gets Permit To Drill Off-Shore Alaska

And then get this, COP wins a permit to drill off-shore Alaska, also at Seeking Alpha:

• ConocoPhillips' plan to build the first-ever oil production facilities at a federal reserve in Alaska is approved by the U.S. Bureau of Land Management, FuelFix reports, allowing COP to construct an 11.8-acre drilling pad and related infrastructure inside the reserve.
• The project offers Alaska the hope of adding new oil to the 800-mile-long Trans-Alaska Pipeline System, which was originally built to ferry 2M bbl/day of crude away from North Slope oil fields; it now carries about a quarter of that amount as nearby production declines, leading to slower flows.
• But with low oil prices, it is unclear when or if COP would proceed with its broader Greater Mooses Tooth project, which ultimately could involve drilling up to 33 wells in the National Petroleum Reserve-Alaska.

In Some Places This Is Called Extortion -- July 1, 2015

It costs about one million dollars ($1 million) to lay one mile of crude oil pipeline in the Bakken.

See story at Bakken.com:

A second operator in the Bakken was granted a flaring exemption today due to a pipeline that Oneok was unable to complete due to right-of-way constraints.

The North Dakota Industrial Commission voted unanimously to “stay consistent” and allow Oxy USA to avoid penalties due to its flared gas on wells affected by Oneok’s cancelled gas pipeline project on the Fort Berthold Indian Reservation. In May, the commission granted a similar request from XTO Energy.

Oneok was forced to halt the proposed pipeline after it was unsuccessful in obtaining an easement from the Three Affiliated Tribes for a 1.8-mile section near Killdeer, despite Oneok’s offer to pay nearly $10 million a mile – 20 times the going rate.

“As opposed to a payment for use of the land,” Helms said, “they wanted a tariff on every mcf of gas that moved through that pipeline during the life of the pipeline, and that was just a no-go with the operators.”

Oneok’s plan B involved rerouting the pipeline across 4.8 miles of federal land but was again denied approval. It is now constructing a new gas plant in Dunn County off the reservation to handle the gas.

Though Oxy asked to avoid flaring penalties on its affected wells in Dunn County until the third quarter of 2016 when Oneok plans to have its gas plant constructed, the commission only granted relief for six months, believing that further construction within the Bakken this summer may provide other means of gas capture for the operator. The exemption only applies to wells that were in production when Oxy became aware of the cancelled pipeline in February.

The bottleneck caused by the failed pipeline project also affects Marathon, Continental Resources, ConocoPhillips (doing business in North Dakota as Burlington Resources) and Newfield Exploration.

The state’s Department of Mineral Resources Director Lynn Helms told the commission he expects to receive flaring exemption applications from these operators as well.

The July, 2015, Dockets Are Posted -- June 25, 2015 -- QEP Looking To Drill 24 Wells On Each Of Two 1280-Acre Units

Disclaimer: these summaries are for my personal use only; you are free to read them; don't quote me on them; there will be typographical and factual errors.  If this is important to you go to the source. Link here.

Past dockets are archived here.

Highlights. These are just the cases that caught my eye the first time through; full summary is here.

Wednesday, July 22, 2015

Newfield with several cases requesting waivers for flaring. This post explains the reason for the flaring cases.
24183, CLR, Banks and North Tobacco Garden-Bakken, 14 wells on an existing 1280-acre unit; McKenzie
24184, CLR, Camp-Bakken, 22 wells on an existing overlapping 2560-acre unit; McKenzie, Williams
24199, XTO, Capa-Bakken, establish seven overlapping 2560-acre units; and two overlapping 3840-acre units; 2 wells on each, Williams
24234, Peregrine Petroleum Partners, Flat Top Butte-Bakken, 4 wells on an existing 640-acre unit, McKenzie

Thursday, July 23, 2015

This may be a record: Whiting has 91 pooling cases in one day
24258, Whiting, Sanish-Bakken, establish 6 overlapping 2560-acre units; 11 wells on each, Mountrail
24260, MRO, Antelope-Bakken, 15 wells  on two 1280-acre units; McKenzie
24361, Lime Rock Resources, Stanley-Bakken, 6 wells on each of three 640-acre units; 6 wells on a 1280-acre unit; 14 wells on each of seven 1280-acre units; 6 wells on each of three 2560-acre units, Mountrail (18+6+98+18 = 140 wells)
24362, QEP, Grail-Bakken, 24 wells on each of two 1280-acre units, McKenzie [14/23-150-95; 15/22-150-95] -- see below

Friday, July 24, 2015

Two continued cases

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24362, QEP, Grail-Bakken, 24 wells on each of two 1280-acre units, McKenzie [14/23-150-95; 15/22-150-95]:

North Dakota State Senator Proposing "Quick Take" Provision (Eminent Domain) To Allow Oil Industry The Needed Pipeilne Easements They Desire -- January 31, 2015

The Dickinson Press is reporting that Senator Sen. Jim Dotzenrod, D-Wyndmere, North Dakota, wants to use "eminent domain" to force surface owners to acquiesce to demands by oil industry for pipeline easements. Specifically the bill would:

• recommend a constitutional amendment creating a “quick take” provision so that if 85 percent of easements have been obtained, the operator may obtain immediate access to the remaining non-consenting landowners’ property

At least that's what I take away from the story, but there's a lot more to it, and I may have misread it. If this is important to you, go to the linked article. 

The provision is part of the a bill addressing the flaring issue in the Bakken. I'm being told that "eminent domain" is a non-starter on the Fort Berthold Indian Reservation (as in "not lawful") and that's where the majority of the flaring problem resides in the North Dakota Bakken.

I like the "quick take" verbiage. That will get someone's attention. LOL. Starting to sound like Chicago politics.

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

Headlines only; it's easy to subscribe to The Williston Wire.


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

All Words, Not Much Substance, Again As Usual -- Yes, Talking About President Obama And His Commitments To Native Americans

The link is here.

The article beings:

When President Barack Obama paid his much-ballyhooed visit to the Standing Rock Indian Reservation in North Dakota – a rare presidential visit to Indian country – tribal sovereignty was a big part of the narrative. The President touted policies like the Violence Against Women Act, which gave tribes the authority to prosecute crimes committed on Indian lands by non-tribal members.

“I know that throughout history, the United States often didn’t give the nation-to-nation relationship the respect that it deserved,” the President said during his brief address in Cannon Ball, North Dakota. “So I promised when I ran to be a President who’d change that — a President who honors our sacred trust, and who respects your sovereignty, and upholds treaty obligations, and who works with you in a spirit of true partnership, in mutual respect, to give our children the future that they deserve.”

Lofty rhetoric, to be sure, but just a week after the President spoke those words a member of his administration was before the House Natural Resources Committee to argue against a bill that would give tribes greater sovereignty in regulating oil and gas development on Indian land.

Something you’d think President Obama would support, given his promise to respect the sovereignty of the tribes.

Data points or the writer's contention:

• flaring of natural gas is seen as a problem in the Bakken
• the worse flaring appears to be on the Fort Berthold Indian Reservation
• this is due to partly to a) pace of drilling; and, b) difficulty the terrain presents in laying pipeline (but I have a bit of a problem with "difficult terrain"; oil companies have worked with much more difficult terrain than encountered in North Dakota
• much of the problem appears to be due to federal red tape in permitting
• Native Americans, working with state, think they could solve problem more quickly without federal obstacles
• President Obama says "no"; Native Americans and the state are not smart enough to do this on their own; they need federal bureaucracy to do it right
• the rest of the state is doing much better in capturing natural gas rather than flaring it

And so it goes.

As they used to say, "White Man speaks with forked tongue." I would add the obvious but I won't.

Link To North Dakota Petroleum Council Flaring Task Force: Gas Capture Plan

Link to PDF here: http://www.legis.nd.gov/files/committees/63-2013nma/appendices/15_5071_03000appendixb.pdf?20140520183602

It could take a minute or so to download.

A big "thank you" to Don for the link.

KXNews reports the story:

A University of North Dakota researcher says that about 270 oil wells are responsible for 60 percent of all the natural gas flaring in the state.

Chad Wocken is a senior research manager at UND's Energy and Environmental Research Center.

Wocken says there is no "silver bullet" to cut the amount of natural gas that oil drilling companies are burning and wasting instead of capturing. He says the center is exploring the efficiency of different methods to capture gas in remote sites.

Finally Some Numbers On Flaring; Almost 50 Percent Of Natural Gas Is Flared On The Reservation

Updates

May 17, 2014: this is precious. The agency who oversees flaring in Fort Berthold (see below) has now announced it will devote its limited resources to study oil and gas industry impacts on developing the Niobrara. Trib.com is reporting:

On the heels of a report that the Bureau of Land Management failed to inspect more than 2,000 oil and natural gas wells over a three-year period, the BLM formally announced Friday that it will study the environmental impacts of expanding development in Converse County.

The bureau said that up to 5,000 oil and gas wells could be drilled there in the next decade. 

Federal regulators failed to inspect the wells on public lands over a three-year period, the Government Accountability Office reported this week, in a reflection of rising energy production across the United States.

The agency screwed up in the Bakken and now taking that expertise to the Niobrara. By the way, it does put the Bakken into perspective. The article says that up to 5,000 wells will be drilled in Converse county in the next decade (ten years?). They will drill that many wells in the next two years in the Bakken.

Original Post

Maybe the "number" has been reported before; I don't know. Long before the mainstream media noted the problem, I calculated that the BLM-managed reservation had the biggest problem with regard to flaring. I even started a "BLM-flaring" tag. Finally, it's being acknowledged. And again, maybe it's been reported before but I can't recall.

The Dickinson Press is reporting that the reservation is the main problem for flaring in North Dakota:

Reducing natural gas flaring on the Fort Berthold Indian Reservation has more hurdles than the rest of the state, but a tribal task force says flaring can be cut in half within five years.

The reservation flares about 48 percent of its natural gas due to a lack of adequate pipelines and other infrastructure, said Carson Hood Jr., director of the Mandan, Hidatsa and Arikara Nation Energy Division.

“In the beginning, industry had not developed the infrastructure to accommodate future wells,” said Hood, one of three people heading the tribe’s flaring task force.

But the reservation has additional challenges, including working through lengthy processes with federal agencies to secure rights-of-way for pipelines, Hood said.

One would think the federal government would expedite natural gas pipelines with all the concern about global warming. 

I don't understand all the obstacles. Just shut down drilling. That will solve the flaring problem.

The solution: five years to get the flaring to half what it is now. Five years. Wow, the federal bureaucracy works slowly. Oh, that's right. It's been six years of review for the Keystone and it looks like now, the government is considering starting completely over on the Keystone review. The Obama administration really has problems with pipelines, it seems. Even the Washington Post agrees it's embarrassing.

For newbies: I've always said that flaring was a red herring. If folks were seriously concerned about the flaring problem it could be solved quickly.

BLM Land In North Dakota Center Of Bloomberg's Attention On Flaring

Bloomberg is reporting, from the reservation in North Dakota:

Drillers flared 340 million cubic feet, or 30 percent, of the 1 billion cubic feet of natural gas produced per day in January, about twice as much as the 184 million cubic feet burned per day two years ago, said Marcus Stewart, an analyst at Denver-based Bentek Energy. The lost revenue adds up to $1.4 million each day, he added.

Energy executives say economic realities force them to start producing oil from wells before infrastructure is in place to haul away less-valuable natural gas. Bakken oil fetched $98.14 on April 4, while natural gas for May delivery fell to $4.439 per million British thermal units on the New York Mercantile Exchange the same day.

“We absolutely don’t want to flare the gas, that’s lost revenue,” said Russell Rankin, a regional manager for Norway-based Statoil, at a well site near the confluence of the Yellowstone and Missouri rivers.

“But if we drill a $10 million well, we’ve got lots of investors and they can’t wait to get that revenue back,” said Rankin, as a gas flare rose over land where the Lewis and Clark Expedition forged a new path through the American West. 

This whole article is a blend of op-ed and news. Actually, no news. This is all well-known.

It is interesting to compare this article with a Bloomberg article on wind and nothing, not one thing, was said about slicing and dicing migratory birds, and bats. 

On another note, talk about a disconnect. I must be missing something. I just posted a link to a Bloomberg article saying wind no longer needs subsidies or certainly implied that ... now this article, also from Bloomberg, suggesting that wind can't compete with wind .... well, which is it? Bloomberg is reporting:

The $14 billion industry, the world’s second-largest buyer of wind turbines, is reeling from a double blow -- cheap natural gas unleashed by the hydraulic fracturing revolution and the death last year of federal subsidies that made wind the most competitive of all renewable energy sources in the U.S.

Without restoration of subsidies, worth $23 per megawatt hour to turbine owners, the industry may not recover, and the U.S. may lose ground in its race to reduce dependence on the fossil fuels driving global warming, say wind-power advocates.

They place the subsidy argument in the context of fairness, pointing out that wind’s chief fossil-fuel rival, the gas industry, is aided by the ability to form master limited partnerships that allow pipeline operators to avoid paying income tax. This helps drive down the cost of natural gas. 

But here, Bloomberg says wind is doing just fine. So, which is it? 

By the way, why don't wind farms form master limited partnerships? I don't think there's any law against anyone forming master limited partnerships but I don't know. If there is a law, Congress could change it. But the inconvenient little fact: wind lucrative to a few corporations needing tax losses to offset other profits, and/or to meet state mandates, but investors aren't making much money on wind, yet. At least that's my spin. Which may be wrong. Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.