By: Scott Reed, Managing Principal for Planning, Permitting and Licensing
Developing domestic energy from shale formations across the US continues to be a huge media and public interest story. While considerable attention has been paid to the Marcellus Shale region, North Dakota’s Bakken Shale is increasingly in the news.
Unlike the Marcellus Shale where the focus in on natural gas exploration, the Bakken and several other promising discoveries are rich in oil. New unconventional drilling technologies have opened up oil reserves such as the Bakken for economical production.
As recently reported in NGI’s Shale Daily, some think Bakken oil production – which has grown from virtually zero in 2006 to more than 530,000 barrels per day in 2011 – may eventually rival that from countries in the Middle East.
While this new domestic production boosts energy independence for America, it is not without issues. Companies exploring and developing this oil resource in the Bakken and elsewhere are facing a major challenge: what to do with the natural gas that is extracted along with the oil.
Because the natural gas can’t be trucked out, or transported by rail like the oil can, and because the region lacks sufficient infrastructure to collect, process and move the gas, burning the gas – flaring – is really the only viable option at this time.
Flaring in the Bakken region is so prevalent it can even be seen from space – check out these incredible images from Midwest Energy News.
Aside from essentially sending resources up in smoke, flaring natural gas presents an array of economic, environmental and regulatory challenges that must be addressed by government and industry together in a responsible manner.
Economic: According to the U.S. Energy Information Administration, more than one-third of the natural gas produced in the Bakken is flared – that’s approximately 100 million cubic feet per day. In 2011, the total quantity of gas burned in North Dakota via flaring had an estimated market value of roughly $110 million. You can read more here. A sound energy policy to guide responsible infrastructure planning, permitting, and construction, along with energy export, could help the country more fully capitalize on its abundant natural gas resources.
Environmental: Flaring results in air emissions from the combustion of the natural gas sent to the flare. When a flare pilot is extinguished due to high winds or harsh weather conditions, unburned fuel gas can contribute to methane emissions. Upset or unplanned emissions at the well site can cause liquid spills and other discharges that can knock a flare out of commission, which could lead to uncombusted natural gas and pilot fuel gas being vented directly to the atmosphere.
Regulatory: Flaring is already regulated at both the federal and state level. And right now the U.S. Environmental Protection Agency is releasing new regulations (NSPS Quad O) that will add significant and in some cases ambiguous requirements causing producers to invest in new flare and/or vapor recovery equipment, as well as significantly increased inspections, emissions monitoring, and record keeping.
To date, no one has developed any viable alternative to flaring gas in the absence of a sufficient pipeline infrastructure to transport it away. Installing microturbines at each well pad to generate electricity by burning the excess natural gas from well production– for onsite use or injection into the electrical grid – has been considered, but the process has not been demonstrated to be economical.
For the time being, upstream oil and gas producers continue to comply with the regulations and are investing in appropriate technology, patiently waiting for the midstream segment of the industry to catch up.
Meanwhile midstream operators are feverishly building new networks of gas gathering pipeline and gas processing plants to get that gas to market. The same challenges – economic, environmental, and regulatory – associated with building these pipelines are a subject for another blog post entirely.
As flaring becomes more widespread and moves into other new oil plays, the pressure on both government and industry to effectively address the challenges will only increase.
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