New ND Flaring Regs Make Statoil's Nat Gas Container System Timely
Statoil ASA recently announced a container system to reduce flaring in the Bakken. The company’s timing could not have been better, considering that North Dakota just approved new flaring regulations.
More restrictive regulations covering flaring on existing wells were passed by the North Dakota Industrial Commission – the state’s regulating entity for oil and gas – July 1. The goal of the commission is to reduce flaring to 26 percent by the fourth quarter of 2014, 23 percent by the first quarter of 2016, and 10 percent – with the potential of 5 percent – by the fourth quarter of 2020, according to the commission’s website.
Previously, about 30 percent of natural gas in North Dakota was flared.
Operators that do not comply with the new flaring restrictions will be subject to restrictions in oil production. Operators will be restricted to producing 200 barrels a day if they do not collect at least 60 percent of their natural gas. There will be a 90-day grace period for an operator not meeting the new rules to produce at a maximum rate before being subject to a penalty.
The new regulations on existing wells fall on the heels of more restrictive regulations covering flaring on new gas wells, which were approved and went into effect June 1. The regulations require energy companies that are filing for permits to also submit a plan to capture natural gas that is likely to be released by the new wells. No new wells will be approved without a plan, according to North Dakota state officials.
Estimates prior to the new regulations found that as much as 30 percent of natural gas found in the Bakken was flared, compared with a national average of less than 1 percent. The amount of emissions produced by flaring in the Bakken has been nearly 13 billion pounds annually, compared to about 365 billion pounds of emissions that are produced from the oil that comes from the Bakken annually, according to a December 2013 story in Forbes.
While the comparative amount of emissions from natural gas flaring in a year might not seem like much, estimates are that as much as $1 million worth of energy a day is being wasted, according to Bentek Energy in a Jan. 14 story on National Public Radio (NPR).
Statoil's Solution to Flaring
Statoil does not accept continual flaring as a cost of doing business, the company said. Current flaring is less than .4 percent of global gas flaring, and the company set out to reduce its level of flaring in the Bakken.
Flaring in the Bakken is a dynamic problem, Lance Langford, Statoil’s vice president of Bakken Development and Production in North America, said in a statement. New wells initially overwhelm existing pipeline infrastructure, and because wells come into production all around the formation, flaring continually moves around, Langford explained. That meant that a system to capture the gas that would have been flared needed to be mobile. Statoil sought a solution that would increase efficiency, increase production and reduce the company’s environmental footprint.
General Electric Oil & Gas Inc. (GE) is another company that recognized and was worried about the amount of flaring in the Bakken. GE believed that the technology needed for a solution existed already, according to Commodities Now, so the company began working with Statoil and Ferus Natural Gas Fuels on solving the problem.
The collaboration between the companies recently resulted in a mobile container system capable of capturing and compressing the natural gas that would otherwise have been flared. Because the container system is mobile, the captured and compressed natural gas (CNG) can be transported to other locations, where it can be utilized as a fuel. The system is therefore able to reduce emissions, with the added benefit of maximizing energy efficiency by utilizing fuel that would otherwise be wasted, according to Langford.
To take advantage of the compressed natural gas, Statoil converted its drilling fleet from diesel-powered to a bi-fuel fleet that can also run on natural gas. That allowed the company to replace 40-50 percent of the diesel used for fuel, thus reducing emissions and fuel costs, Langford said, adding that Statoil is planning to test the bi-fuel approach on its fracking fleet. In the future, the company may use the compressed natural gas for other uses, as well, including generators, truck fleets and more, the company added.
The container system is particularly useful in the Bakken, where the existing infrastructure of pipelines and processing plants is inadequate to keep up with demand. And while more pipelines and processing plants are being built, the infrastructure in the state is likely to continue lagging behind the amount of natural gas produced in the formation.
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