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Fracking Boom Waste: Flares Light Prairie With Unused Natural Gas

North Dakota wastes about $100 million worth of natural gas each month by burning it off as the shale boom has put a strain on pipeline systems.
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/ Source: CNBC.com

From his driveway, farmer Tom Wheeler's view of North Dakota's grasslands seems endless. Fields of soy, wheat and canola stretch to the horizon in all directions. But as drillers flock to cash in on the state's booming shale gas industry, that horizon has become increasingly marked by natural gas flares.

"In the '70s we had so many dry holes that you never noticed the flares," said Wheeler, who worked on an oil rig in the state's Bakken Basin 40 years ago. "But now every well is productive — and the flares are everywhere."

The prairies — once dotted only with cattle and an occasional oil derrick — are now marked by thousands of flares, open pits or steel pipes burning off excess natural gas, a byproduct of the rapid rise in oil drilling. New wells are coming online so quickly that the pipeline infrastructure for natural gas has not been able to keep pace.

Hydraulic fracturing, or fracking, forces natural gas and crude oil out of shale buried deep below the earth by using highly pressurized and treated water. Drillers seek out valuable crude oil, but natural gas comes out of the ground, too. Flaring is the burning of natural gas that can't be processed or sold. All those flares, meanwhile, are adding up. They burn so brightly that NASA astronauts have taken pictures of their glow from space.

"When I was growing up, we were taught not to waste anything."

Many oil drillers are unable to direct the flow of natural gas coming off wells into existing pipelines, which already are at full capacity. They have no choice but to add a flare at each site with a well. The result is nearly a third of the natural gas produced in the region is being burned to secure crude oil, and subsequently creating thousands of flares.

Now regulators are cracking down. North Dakota passed new flaring standards, with the goal of capturing more natural gas. Energy companies are scrambling to meet the rules and curb flaring — some with creative technologies. For some landowners like Wheeler, it's not the noise or light pollution that gets to them.

In Ray, Hess has a gas compression station bordering Wheeler's property. Natural gas is pumped from several surrounding oil wells, before being transported to a larger processing facility in Tioga. A four-burner flare sounds like a jet engine, and the 20-foot flame, sitting atop the 30-foot torch, can be seen for miles. "It's not just a waste to the landowner or the tax collector, it's a waste of the land's natural product," Wheeler said. "When I was growing up, we were taught not to waste anything."

Every day, drillers in the Bakken burn off about 350 million cubic feet of natural gas. That comes to more than $100 million worth of gas lost each month — a figure that makes the state's mineral rights holders' unhappy. There are at least 12 class-action lawsuits filed against the drillers by mineral rights holders seeking lost revenue.

Trying to manage the growth of the Bakken, North Dakota's new flaring standards aim for drillers to capture 90 percent of all the gas they release by 2020. Drillers now capture roughly 72 percent. When the new standards come into effect in October, drillers will have to raise that figure to 74 percent, with subsequent gains made leading up to 2020.

While environmentalists say the standards are still too lax when compared to states like Alaska and Texas — where more than 99 percent of all natural gas is collected — regulators say the new North Dakota standards will be strictly enforced. Any wells that are found to be burning too much gas could face drilling curtailments.

As new regulations begin to take effect, oil producers are finding creative solutions to the flaring problem. The industry isn't in denial when it comes to the flaring, says Lance Langford, vice president of the Bakken Asset for Statoil.

"I think we all know we need to reduce flaring. We want to reduce flaring," he said. "It's not just the environmental footprint we have here. There's also value capture for us, for the mineral rights holders and the state. I think it's fair, but it's going to be a challenge."

Langford would know. His Norwegian-based company has been one of the biggest players in the Bakken region, since it purchased Brigham Exploration for $4.4 billion in 2011. With roughly 300,000 net acres, Statoil is making a concerted push to expand its presence in the region. It's also working to cut its flaring.

Statoil last year announced a joint partnership with General Electric and Ferus Natural Gas Fuels, a Canadian natural gas logistics company. The companies have been piloting GE's "CNG in a Box" technology at a Statoil rig just east Watford City, North Dakota. The unit compresses natural gas and stores it for the final distance of the fuel process.

This option is referred to as the "Last Mile" fueling solution.The unit doesn't look like much — a brown box about the size of a small shed, with pipes running out of it. But the unit holds enough CNG to help power operations for a Statoil rig drilling 11 new wells. By this time next year, Statoil hopes all six of its rigs are partially running on natural gas captured from its wells.