Producers Will Find Ready and Welcome Market for Nat Gas in Bakken

A new polyethylene production facility in the Bakken shale could soon help oil and gas producers in the region reduce natural gas flaring in North Dakota, the Bakken Update said this week.

Significant amounts of natural gas are wasted during flaring; estimates by the non-profit sustainability organization CERES are that as much as 30 percent of all natural gas discovered in the state is flared. That comes out to more than $100 million a month of natural gas that is just burned off, according to a July 29, 2013 Reuters article.

Because the new polyethylene plant will use liquid natural gas in the production process, it creates a local need for the product, thus reducing the amount of natural gas that is currently being flared due to a lack of infrastructure to move the gas to the market.

The North Dakota Industrial Commission, the state’s regulating entity for oil and gas, began imposing new flaring restrictions July 1. The target for the fourth quarter of 2014 is to reduce flaring to 26 percent, and to 23 percent by 1Q 2016. By 4Q 2020, the target is 10 percent, according to the North Dakota Industrial Commission.

Some companies, such as Statoil ASA, General Electric and Ferus Natural Gas Fuels, are working on approaches to capturing and moving the natural gas that is now being flared, Statoil said in a statement. Continental Resources Inc., one of the top producers in the Bakken, is working toward a goal of zero percent flaring, a goal that CERES agrees with.

Badlands NGL, LLC and its partners will invest $4 billion on the polyethylene production facility. Polyethylene is used in a variety of consumer goods and industrial plastics, and the plant will be able to produce 3.3 billion pounds of it annually, while employing 500 workers in a variety of jobs related to the manufacturing process, according to the Bakken Update.

The plant is welcomed news to oil and gas producers in the Bakken formation. Current production is more than the existing pipeline infrastructure – which is running at full capacity – can handle. The infrastructure is growing, but it continues to run well behind production, the Midwest Energy News said. So, the new plant will cannot come on line quickly enough.

“This project is fully aligned with our goals to reduce flaring, add value to our energy resources right here in North Dakota, and create diverse job opportunities across the state,” North Dakota Governor Jack Dalrymple said in a press release. “By advancing the responsible development of our energy resources, and by adding value to all of our resources, the opportunities in North Dakota are boundless.”


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