North Dakota's wasteful fracking problem
The state burns 30% of its natural gas production because of infrastructure deficiencies. Critics call it 'something Homer Simpson would do.'
For cattle rancher Vawnita Best, the struggle by North Dakota regulators to keep up with the oil boom strikes close to home: She can see the natural-gas flares of an oil well from her front porch.
"It's been flaring for nearly a year," she said amid the rolling hills of her Elkhorn Creek Ranch. "It's absolutely ridiculous to be so wasteful," she said. "They're flaring gas and using diesel to fuel the pumps -- it's like something Homer Simpson would do."
The well is one of thousands dotting the landscape and producing gas as a byproduct of hydraulic fracturing and horizontal drilling for oil in the Bakken Shale. Because North Dakota lacks adequate infrastructure, drillers are forced to burn off whatever they can't capture and ship to market. In April alone, such wells burned 10.3 billion cubic feet of natural gas, according to the state, valued at nearly $50 million.
As flaring wells spread like a prairie fire, North Dakota's regulations have struggled to keep pace. Beyond being an eyesore, burning off natural gas degrades air quality. Critics also say producers aren't paying all the royalties and taxes owed on the gas that is flared. Energy companies lose out on gas revenue, too, but that is offset by what they generate from Bakken crude oil.
"It's a failure of regulation. There was an opportunity to do this the right way, but you can't unring the bell," said Matt J. Kelly, a lawyer at a Bozeman, Mont., law firm representing Bakken mineral-rights owners claiming unpaid royalties for flared gas.
Stung by criticism that it has allowed oil producers to flare wells indefinitely, the North Dakota Industrial Commission on June 1 adopted rules requiring that gas-capture plans be submitted for companies to get a new drilling permits. The rules require producers to identify gas-processing plants and proposed connection points for gas lines but don't affect permits that already had been issued.
The commission, which promotes as well as regulates the drilling industry, on Tuesday is expected to announce measures to limit flaring of existing wells. The federal government also is considering new limits on flaring.
In the past five years, North Dakota has climbed from the country's sixth-largest oil producer to the only state after Texas to produce more than a million barrels of oil a day. That has brought investment and job growth to a state economy once largely dependent on agriculture.
But while Texas captures all but 1 percent of the natural gas produced, North Dakota burns 30 percent of its output. Oil companies can ship crude, which fetches 20 times more than gas per barrel of oil equivalent, in tanker trucks to pipelines or rail terminals.
Transporting natural gas requires a pipeline connection at the source, however, and North Dakota has far fewer of such pipes and less processing capacity than other oil-producing states.
Government and industry officials say they have moved as fast as possible to limit gas burn offs.
"The only problem is the rate of [oil] production is growing faster" than companies' ability to capture gas, North Dakota Gov. Jack Dalrymple said in an interview. "We have been madly building processing plants and pipelines," he said.
The industry has said it can cut back flaring to 5 percent of production volume over the next six years as gas infrastructure is built, responding to public pressure and the prospect of perhaps tougher rules from the state or federal governments.
"It's not that easy to measure yet, but we're truly making progress," said Lynn Helms, the North Dakota Industrial Commission's director of natural resources. "This has been a really huge sea change in the industry in terms of taking flaring seriously," he said.
Oil producer Hess (HES) in May opened an expanded gas facility in Tioga, N.D., that nearly triples the plant's gas-processing capacity to keep up with Bakken production.
"There was no alternative gas processing available within the state," said Gerbert Schoonman, Hess's vice president for the Bakken. "We're a big international company operating in many countries and we know that it's not sustainable to have a lot of flaring with your operations."
Twelve-story-tall drilling rigs, powder-blue fracking water hoses and well pads ringed by barbed wire dominate the land where Ms. Best's cattle used to roam freely. Like many homeowners in rural Western North Dakota, the fifth-generation resident of McKenzie County doesn't own subsurface mineral rights and as a result can't prevent drilling on her land.
She fought plans for a well to be drilled closer than where it is now, at the end of her half-mile long driveway. "At first, they wanted to build one 200 feet from our back deck," Ms. Best said. Two other wells, also with persistent flares, also are visible from the edge of her property.
Those older wells were drilled three years ago, one by Exxon Mobil (XOM) unit XTO Energy Inc. and the other by Continental Resources (CLR), according to public filings. XTO flared its Wolff well as recently as April and in all but four months since August of 2011, according to state production records. Continental has flared its Palmer well for as many months as not since September of 2011, including as recently as April.
The state bars operators from flaring after the first year a well is drilled, unless companies get extensions on the grounds that the restrictions are economically unfeasible or the well is connected to a gas line.
Yet two-thirds of the wells that flared gas in April were connected to a system with more gas than it could ship or process. "It's assumed they will sell the gas if it's connected," said Alison Ritter, a spokeswoman for the state Department of Mineral Resources, "but sometimes there's insufficient infrastructure to do that."
Flared gas is still subject to royalty. But XTO and Continental haven't paid either for gas flared at the Wolff or Palmer wells, according to Mr. Kelly, the landowners' lawyer.
XTO said it doesn't comment on specific contracts but is working to reduce flaring. Continental declined to comment.
Rancher Ms. Best said the community appreciates the economic boost from drilling. "It's not all bad, it's just poorly managed," she said. "It's the drilling that's to come in the future that weighs heaviest on our minds."
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""Beyond being an eyesore, burning off natural gas degrades air quality""
Wait, burning natural gas degrades air quality? I was told growing up that natural gas burns clean. Thats why environmentalists battled back in the 80's and 90's to get rid of coal plants for natural gas because environmentalists claimed it was clean burning.
Now everything that environmentalists and scientists said about natural gas 20 years ago is now wrong? But I thought the science on natural gas being clean burning was a consensus? I thought the science was settled?
WOW so why were people pushing for "clean burning" natural gas automobiles back in the 80's and 90's if in fact that wasn't true? Can you imagine if auto manufacturers did this with natural gas how poor our air quality would be now?
More proof you can't trust anything the media writes. They change their story to fit which side of the fence they are sitting on on that particular day
Are you referring to the WMD's that ISIS is currently trying to unearth ? Or does your news source not report those little facts ? LOL
Why do you think Obama is restaffing Iraq? Another OOPS moment. And if they get those WMD's they will use them on Israel who will retaliate with nukes. Another OOPS Moment
Now natural gas is no longer clean burning according to this article. Which defies all the science that was taught in schools for the past 30 years.
I guess science doesn't matter to liberals when it comes to their ideology and agenda.
as long as u an I buy the products at over rated prices the companies will do what they want to.
No processing plants for natural gas is just a bad as not enough refineries for gasoline production and the price just keeps going up.
Amy, the point to debate about nat gas being a clean burning fuel;
Has nothing to debate with or about..
Has been beat to death for 50 years..
Everything that burns has unusable or unsafe qualities for humans, left over.
When the term " clean burning" was coined; It referred to only Coal and Oil as a substitute.
Not really a debate per se, just a dumb Marketing Campaign...
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