Increases in North Dakota's crude oil production have resulted in increased associated natural gas production from oil reservoirs, especially in the Bakken region. Because of insufficient infrastructure to collect, gather, and transport this natural gas, about one-fifth of North Dakota's natural gas production is flared rather than marketed. North Dakota's Industrial Commission (NDIC) has established natural gas capture targets in an effort to reduce the amount of flared gas, and they recently issued a revision to the flaring targets in response to faster-than-expected gas production growth in the Bakken region.
North Dakota's current target is to capture and sell at least 78% of total natural gas gross withdrawals, or flare just 22% of the state's natural gas output. Based on the targets established in April 2014, the percentage of flared gas was set to fall to 15% in January 2016 and to remain at that level until 2021. However, on September 24, the NDIC slightly loosened the restrictions in the near term, allowing 22% to be flared through the first quarter of 2016, with the decline to 15% taking place in November 2016.
By law, North Dakota prohibits natural gas venting. Natural gas is flared rather than vented without combustion for both safety and environmental reasons. Vented, unprocessed natural gas contains hydrocarbons that are heavier than air, such as propane and butane, that can be hazardous if introduced to an ignition source. Also, flaring natural gas produces carbon dioxide, which, while a greenhouse gas, has a lower global warming potential than methane, the chief component of vented (noncombusted) natural gas.
Because North Dakota's rapid natural gas production growth makes production volumes difficult to anticipate, the NDIC's targets are based on percentages rather than absolute amounts of flared gas. In 2014, flared volumes in the state reached 0.35 billion cubic feet (Bcf) per day, equal to almost half of total volumes that were either flared or vented in the United States. Since 2014, the percentage of natural gas flared in North Dakota has fallen from 36% to 21%. However, the volume of natural gas flared in the state has remained relatively unchanged. Increased drilling productivity (more production per rig) has resulted in increases in gross withdrawals of natural gas despite decreasing drilling activity (lower active rig count) in the Bakken.
Since the beginning of 2014, growth in natural gas processing infrastructure has kept pace with overall natural gas production growth. However, existing infrastructure still faces a number of challenges. Although new infrastructure and limits on producing from wells not connected to gathering lines have reduced the amount of flaring at unconnected wells, wells that are connected to gathering lines have flared about 15% of total gross withdrawals over the past two years. Even these wells may require compression and capacity additions to handle the region's rapid gas production growth.
In addition, natural gas processing plant capacity in North Dakota is expected to reach 1.6 Bcf/d by the end of this year, an amount on par with total gross withdrawals. But these plants are constrained by the mix of gases and liquids produced at the wellhead. Natural gas produced at the wellhead, referred to as wet gas, contains methane and other hydrocarbon gases such as ethane and propane. From this raw stream, processing plants produce dry gas, which is delivered to interstate gas pipelines, and the plants must separate out most of the heavier hydrocarbon gases that have been condensed to liquid form. These natural gas plant liquids (NGPL) must also be moved to market. NGPL generally cannot be left in the dry gas stream because of pipeline specifications that limit NGPL quantity and the heat content of the gas.
As of August, North Dakota had the second-highest average heat content of natural gas delivered to consumers in the United States, meaning natural gas from the Bakken has higher levels of natural gas liquids (mostly ethane). This high heat content limits additional volumes of ethane that processing plants in the state can leave in processed gas streams. With limited NGPL storage capacity, additional pipeline capacity to move greater NGPL volumes to market is needed for processing plants in North Dakota to avoid reducing throughput volumes, allowing them to keep as much capacity as possible available to reduce volumes of flared natural gas in the future.