Reducing Flaring of Natural Gas

About half a million barrels of oil are produced from the Bakken formation every day. That number is only expected to keep going up. Still, both oil producers and environmentalists say they`d like to see one precious resource better used: natural gas. Much of it is simply being burned off at well sites. Oil leaders say that wasteful practice may soon be a thing of the past.

About a third of the natural gas produced in the Bakken goes up in smoke every day.

“Flaring of natural gas constitutes waste,” said Lynn Helms, director of the state`s Department of Mineral Resources. “Although it`s being done for a couple of reasons. One to produce the oil and secondly to demonstrate to those natural gas companies that we have a big market here and they should be spending their billions of dollars in North Dakota as opposed to somewhere else.”

Billions of dollars are being spent. The oil and gas industry plans to spend three billion dollars on a pipeline project that will transport natural gas to customers.

“Well the biggest thing to reduce the flares is really to get the infrastructure in place,” said Ron Ness, president of the North Dakota Petroleum Council.

The infrastructure is being built, though slower than it can get natural gas to market. On January 20, a natural gas processing plant will be opening near Watford City. The plant is expected to reduce flaring by about 10 percent.

But the market price of natural gas remains a drop in the bucket compared to the profit from crude oil.

“I have never seen a 36 to 1 ratio between the price of oil and natural gas,” Helms said. “Based on the heat value of the two products, it should be about 6 to 1.”

While a barrel of oil is averaging about a hundred dollars, natural gas is selling for just a few dollars. Helms says a lot of it has to do with the natural gas reserves that were found in the Marcellus Shale more than five years ago.

“The Marcellus moved this country from a 10-year future supply of natural gas to a 100-year supply. It increased our future supply by 10-fold. That took the price of natural gas from about $12 per thousand cubic foot down to today`s price of about $3 and that`s gonna take a long time to work itself out of the market,” Helms said.

But even if natural gas prices don`t increase as fast as the industry would like, oil and gas producers are confident the natural gas found in the Bakken has merit.

“Actually North Dakota`s natural gas is more valuable than what we see across the country because it`s very wet. It`s got a lot of liquids in it- butane and propane and those different commodities that you can strip off that gas and send to our homes and you can make that into other components,” Ness said.

Oil and gas producers say their goal is to capture 90 to 95 percent of the natural gas in the Bakken by the middle of 2013.

KFYR-TV