Cutting back natural gas flaring in North Dakota hits a bump

North Dakota oil drillers appear to be losing ground in the effort to meet state-mandated requirements to reduce flaring of associated natural gas at crude oil wells due largely to persistently high flaring rates on the Fort Berthold Indian Reservation.

While operators overall appeared to be close to meeting flaring reduction goals, the issue has been complicated by jurisdictional confusion, significant regulatory hurdles, and potentially overlapping state, federal and tribal regulations, officials claim.

This week, Lynn Helms, director of North Dakota’s Department of Mineral Resources, said that statewide, 28% of associated gas was flared in August, just above the 26% flared limit set by the North Dakota Industrial Commission earlier this year. Under these rules, operators need to reduce flaring levels to 26% by October 1, then 23% by January 1, 15% within two years and 10% by 2020. Producers face dramatic oil production curtailment penalties if they fail to meet these flaring reduction benchmarks.

While the flaring levels from August are close to where these producers are required to be overall, they actually represent a step back in progress from July, when 26% of gas was not captured, and flared gas was reduced by 18.6 MMcf/d from a month earlier. In August, the daily volume of gas flared actually increased 23.5 MMcf/d from July.

“We lost all of that we gained between June and July, plus a little bit more,” Helms said.

While flaring has dropped from a record high of 64% in 2011, Helms said gas capture remains somewhat problematic on the Fort Berthold Indian Reservation. In August, 35.5% of associated gas was flared from Bakken operations within Fort Berthold, which is home to the Three Affiliated Tribes — Mandan, Hidatsa and Arikara Nation.

Flaring enforcement on Fort Berthold lands is complicated by a looming jurisdictional fight among state regulators, who insist that their flaring regulations apply even on tribal lands; the Three Affiliated Tribes, which are developing their own regulations; and the US Department of the Interior, which is developing a flaring rule of its own.

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In a report earlier this year, the tribes said that of the 48% of gas it was flaring at the time, 44% was being flared due to limited takeaway capacity. Building new infrastructure, such as pipelines and gas-gathering facilities, is complicated by the overlap of federal, tribal and state regulations, the tribes claimed.

“The mistaken treatment of Reservation lands as ‘public lands’ creates an onerous burden on development of Reservation lands, and long delays in permitting and [right of way] approval, which reflects a much higher flaring percentage,” the report said. “Removal of these legally unfounded restrictions would facilitate the capture of gas more efficiently on the Reservation.”

In August, more than 333,000 b/d of oil was produced on the reservation, including nearly 135,000 b/d on tribal, trust lands and nearly 199,000 b/d on private, fee lands. Of the 1,310 active wells on Fort Berthold, 1,008 are on trust lands and 302 are on private lands, state figures showed.

North Dakota and Interior officials plan to discuss the jurisdiction issues in the near future, and the state’s attorney general’s office is conducting a legal analysis of state enforcement of flaring on Indian lands, Helms said.

“That is going to be an ongoing issue,” Helms said.

Jessica Kershaw, an Interior spokeswoman, said in a statement that the agency is “working collaboratively with its federal partners, state governments, tribal communities and the private sector to capture natural gas and reduce methane emissions from oil and gas development on public lands.” She declined to comment further.

Helms said any progress on the issue, however, is unlikely until after next month’s tribal elections, which will result in the election of a new tribal chairman and at least two new members of the tribal council.

In March, US Senator John Hoeven and Representative Kevin Cramer, both North Dakota Republicans, introduced the Natural Gas Gathering Enhancement Act (HR 4293 and S 2112) which are aimed at reducing flaring at oil wells by expediting permitting on federal and Indian lands.

When he introduced the bill, Cramer said it would “help infrastructure catch up with the pace of development.”

The bill excludes natural gas gathering lines, which service oil wells on federal and Indian lands from National Environmental Policy Act requirements that would potentially reduce permitting times by months. The exemption would not apply to lines, which service gas wells.

However, both bills have stalled in House and Senate committees and are not expected to be voted on during this congressional session. In addition, the bills face a likely veto from the Obama administration.

— Brian Scheid in Washington

platts