Make no mistake, the Bakken is a tight oil play, and a very good one. But the Bakken, especially in the core areas, is a bit gassy. The latest challenge facing operators and regulators in North Dakota is what to do about the natural gas produced as wells are brought online. The answer, much like when they first ‘cracked the code’ in the Bakken, will likely come from the cooperation and ingenuity of producers, service providers, regulators and advanced technology.
Despite significant investment in gas gathering pipelines and gas processing that has already reached $13 billion and climbing, the amount of gas being produced in the Bakken has made it a challenge to meet the state-imposed flaring targets. The most recent ‘Director’s Cut’ from the North Dakota Department of Mineral Resources stated that 18.2 percent of the gas produced in North Dakota was flared, up slightly from the prior month. There is work to be done because the state’s gas capture goal increases to 88 percent on Nov. 1, 2018.
The increasing gas capture requirement is forcing producers to restrict well production and defer well completions. Most agree that throttling back production is not a viable long-term solution. This is not fair to all the stakeholders involved including the private mineral owners.
The industry is responding with additional gas processing plants are being planned and built. North Dakota is looking at seven new plants over the next seven years. Based on plans, there will be three new plants in operation by the end of 2019, two more by 2020, and another two by 2025. Each of these will require new investment of at least $4.5 billion per plant, including the pipelines. This is a large investment to keep up with production in an area that is considered an oil play, not a gas play.
While the associated gas from Bakken oil production is a significant challenge today, industry and regulators are committed to reducing the flaring of natural gas. There are logistical and economic challenges to capturing and processing natural gas, but the associated gas is a valuable commodity. That value has everyone in North Dakota looking outside the box for solutions.
Recently, the Houston Chronicle ran a three-part article on natural gas production in the Gulf Coast and, specifically, the value of ethane. From Part Three of that story: “Nobody could have foreseen the U.S. becoming a major exporter of plastics,” said Neil Chapman, a Senior Vice President at ExxonMobil. “It’s a byproduct of shale gas. That is what’s truly amazing about this breakthrough.”
The Houston Chronicle feature focused on Texas gas production, but it also applies directly to the Bakken. While associated gas production is small compared to oil production in the Bakken, the gas, especially in the core Bakken area, is very wet, with ethane and propane being significant components.
The Bakken has unique logistical disadvantages as compared to the Gulf Coast and, while significant investment is being made in gas processing infrastructure, the industry and regulators are looking for new ways to prudently manage this valuable resource.
The history of the Bakken as a test site, a laboratory of technological advancements, over the past 10-plus years shows a commitment to develop the resource prudently and economically by focusing on improvements in drilling and completion techniques and, more recently, controlling costs. The next advancement may be the underground storage of natural gas, allowing time for gas processing infrastructure to catch up, or better yet value-added petrochemical investments in North Dakota.
Thinking Outside the Box
The North Dakota Industrial Commission recently requested a study of the storage of natural gas in underground geological formations in North Dakota, focusing mainly on the Broom Creek Formation (Minnelusa Group). This creative solution is a twist on an idea that has been under study by the Energy & Environmental Research Center (EERC) for a few years. The EERC has been studying the feasibility of capturing and storing CO2 underground and now that science is being used to look at the underground storage of natural gas.
Lynn Helms the Director of North Dakota’s Department of Mineral Resources, who suggested the study, says, “North Dakota is the only state that has the legal and regulatory process in place to do this study quickly. We have spent the time to get Class 6 UIC primacy, and as a result, we have everything in place and able to do this at the state level, not the federal, which will allow us to move quickly. More than 10 years studying CO2 storage has prepared us for a process of only 90 days to do the study and 60-90 days to issue a storage order and permit.”
According to Bethany Kurz from the EERC, the study will include assessing the produced gas compositions, gathering options, compression requirements and costs. Also, the study will have a simulation of produced gas injection into the Broom Creek Formation to estimate the site-specific compression needs while looking at injection rate and storage potential. The possible plume extent and migration over time and future recovery efficiency will similarly be a focus as well as the high-level assessment of alternate targets for produced gas injection (e.g., carbonate reef structures, conventional and unconventional oil reservoirs). The study will include the assessment of economic impacts and regulatory issues.
“North Dakota’s geology is like a stack of pancakes or a layer cake of rocks, allowing for many innovative technologies and advancements in the future,” says Helms.
“Storing natural gas underground is an interesting possibility, especially considering the gas is extracted from underground in the first place. Assuming underground storage meets state regulatory requirements, this could be a be a solution benefiting the interests of all parties,” says James Taylor, Senior Fellow for environment and climate policy at The Heartland Institute.
A shift in focus from sequestering CO2 to the storage of natural gas has many proponents because it gives producers one more tool in the process of producing oil from the Bakken without the regulatory constraints related to North Dakota’s gas capture requirements.
Producers and mineral owners benefit when the full value of the associated gas is realized, and consistent and well-planned drilling programs can be designed and implemented. Producers and regulators are working to solve the gas problem, and one thing is certain; the Bakken laboratory is alive and well.
About the Author: Bette Grande is a Research Fellow for energy and environment issues at The Heartland Institute. She served as a North Dakota state Representative from 1996–2014. Grande was a member of the House Appropriations Committee, Education and Environment Division. She was born and raised in Williston, North Dakota.