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News Release: Industry to increase natural gas capture to 85 percent within two years and 90 percent in six years

Posted 1/29/14 (Wed)

ATTACHMENTS: Flaring Task Force Presentations; Gas Capture Plan example

FOR IMMEDIATE RELEASE                                                                              

January 29, 2014    

Contact:

Tessa Sandstrom, 701.223.6380                                                                                                                        

      

INDUSTRY TO INCREASE NATURAL GAS CAPTURE TO 85 PERCENT WITHIN TWO YEARS AND 90 PERCENT IN SIX YEARS

Success dependent upon full engagement from key stakeholders

Bismarck, N.D. – The North Dakota Petroleum Council (NDPC) Flaring Task Force today told the North Dakota Industrial Commission (NDIC) that the industry can increase natural gas capture to 85 percent within two years, 90 percent capture in six years, and could capture up to 95 percent of gas with full engagement from the NDIC, state agencies, the Legislature, Three Affiliated Tribes, landowners and oil and gas companies. The Task Force outlined how these capture targets can be met and presented self-prescribed practices the industry will implement to increase transparency and accountability when developing the state’s natural resources. These reductions are forecasted primarily to come from a combination of enhanced construction of both gathering pipelines and natural gas processing plants along with implementation of the operational recommendations from the task force.

“Individual companies have come together to present a comprehensive plan that will help reduce flaring from current levels even as oil and gas production significantly increases,” said Ron Ness, president of the NDPC.

Recommendations presented by the Task Force include:

  • Gas Capture Plans (GCP) submitted by upstream (producers) and midstream companies (natural gas processors and gatherers) that will regulate currently flaring wells and future new wells. This directive will require operators to create a plan prior to filing for a drilling permit, rather than providing this information after a year of production. Each GCP will include a location of the well and closest pipeline and processing plant; the system capacity of gathering and transport gas lines; the volume of gas flowing from multi-well pads; and, a time period for connection.
  • Regulatory consequences for failure to comply. A failure to submit a GCP as prescribed by the industry may result in a denial or suspension of new drilling permits, while existing wells may be required to restrict production until under compliance. If goals are not met for a well as prescribed by a GCP, companies may need to restrict production or flowback to meet available gas gathering capacity. Extensions will be available for circumstances beyond control, including inclement weather, plant construction, power outages, and right of way disputes. Currently, wells may flare for one year from production date before a producer must begin to pay royalties and taxes, cap the well, or connect it to a gathering line, electrical generator or other equipment with value-added purposes. Companies may apply for extensions under current regulations, but there are no requirements to develop plans to capture.
  • Policies and legislation to enhance Right of Way (ROW) access. Pipeline infrastructure is crucial in capturing natural gas, and inability to obtain right of ways is a primary cause of natural gas flaring. Easements may take 180 days or more to obtain, which is the period that a well is producing at its highest rate. In some cases, landowners will not grant easements at all. The industry recommends that a ROW Task Force be formed to review potential legislation to improve ROW access to reduce flaring. The task force would include the North Dakota Pipeline Authority (NDPA), the State Energy Impact Coordinator, county leaders, landowner groups and industry members, and would be headed up by the Attorney General. Capturing 90 percent of natural gas or more would be incumbent upon meaningful solutions to resolve ROW issues and challenges on the Fort Berthold Indian Reservation.
  • Support infrastructure and technology. The industry recommends that the state assist and support new technologies and the rapid build out of pipeline and electrical transmission infrastructure by providing property tax credits, production tax credits and low interest loans for pipelines and electric transmission; incentives for value-added ventures, such as LNG, CNG, petrochemicals, and fertilizers; and, increased funding for the Oil & Gas Research Council to focus on remote capture technology and value-added markets.
  • Pipeline Hotline. The industry recommends the NDIC develop and manage a pipeline “hotline” for reporting issues related to pipeline reclamation. The hotline would provide landowners with an easy notification system for problems and concerns and would include follow-up with the company and landowner to ensure quality control. The hotline would complement rules recently passed by the NDIC to map all gas and liquid gathering lines, establish a $75 million fund for cleanup or reclamation of gathering lines, and extend mediation services to include disputes between the landowner and energy companies to include pipelines.
  • Midstream Planning and Tracking. Midstream companies (natural gas processors and gatherers) will meet regularly with the NDIC to give the status of operations and updates.

“The industry recognizes the importance of capturing this valuable resource. We believe our suggested approach allows the industry to continue oil production, while capturing more natural gas for the benefit of mineral owners, value-added markets and the state as a whole,” said Ness.

Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 500 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

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Attachments:

Flaring Gas Task Force Presentations

Gas Capture Plan Example