Last November, the North Dakota Petroleum Council (NDPC) assembled its first Flaring Task Force to deal with the state's chronic gas flaring problem. Despite more than 9,500 miles of gas gathering pipes already in place and 1.1 billion cubic feet per day (Bcf/d) of gas processing capacity, nearly 30% of Bakken gas is flared, according to state data. The problem has become worse over the past two years, as production growth has greatly outpaced infrastructure construction. With increasing production from a basin that spans 22,303 square miles (sq m), natural gas flaring has become one of the most prominent environmental issues at hand.

Under North Dakota's current flaring regulations, producers are allowed to flare associated gas for the first year of a well's production. Producers can also apply for extensions if they are able to demonstrate inability to capture the natural gas. North Dakota regulators, however, have granted nearly 95% of all extension requests over the last two years, which has prompted the NDPC to offer a solution to the problem. The task force, composed of 35 petroleum industry experts, presented its findings on Jan. 29, 2014, mapping out a series of near-and long-term solutions.

Among the many recommendations made by the task force to regulate current as well as future gas flaring in the Williston Basin, a key requirement will be for companies to develop gas capture plans (GCPs). This directive will require both upstream producers and midstream companies to create a plan prior to applying for a well permit, instead of providing this information one year after the well begins producing. For those who fail to comply under the GCP, consequences may include having permits denied or suspended and production restricted until they comply.

The team has also proposed adding a supplemental task force to improve the granting of rights of way (ROW) for pipelines. It currently takes 180 days or more to obtain infrastructure rights of way, which, under the proposed new anti-flaring rules would create a huge impediment to bringing wells on production, given the ongoing rapid pace of drilling in the Bakken. The ROW Task Force will work to reduce this time and will also collaborate with the Fort Berthold reservation, where ROW issues have historically resulted in only 60% of the associated gas being captured. The ROW Task Force will be headed by the attorney general and will include the North Dakota Pipeline Authority, the state energy impact coordinator, county leaders, landowner groups and industry members.

Along with the GCP requirements, recommendations by the task force include state-driven tax incentives for building pipelines, electric transmission and other value-added ventures such as small-scale liquefied natural gas.

Based on findings by the Flaring Task Force, the industry should be able to increase gas capture to 85% within two years, 90% within six years and will ultimately reach 95% gas capture. The Task Force's report detailing future Bakken midstream development also suggests that nearly $1.7 billion of new gas gathering infrastructure has been announced for 2014, including the build out of additional pipeline, compressor pumps and processing facilities. There will likely be more new construction as the regulations go into effect.

Gas flaring results in economic loss and waste of hydrocarbon resources with negative environmental impacts. Though the Bakken produces mostly oil, the associated gas is rich in NGL and the rapid growth in the play is causing gas production to also grow rapidly. On a barrels-of-oil-equivalent basis, the NGL production averages about 45% of the wellhead gas production. The foregone revenue from natural gas and NGL, if flaring continues at the current 30% rate, is substantial. If flaring is allowed to continue at its current rate, lost revenue could top $700 million per year, assuming natural gas at $4 MMBtu and NGL at $37.80 per barrel.

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