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Flaring gas is like burning dollar bills. But in this case, the oil and gas industry is burning the George Washingtons to get to the Benjamin Franklins. Natural gas is abundant, highly useful, relatively clean, and, in the way. Today, it is being burned uselessly in flare stacks at a rate not seen in decades. This has caught the attention and ire of citizens and environmentalists, not to mention royalty owners.
This past winter, there was a severe shortage of propane in North Dakota. Heavy demand from farming (propane is used to dry out wet grain after harvest) had sent prices skyrocketing as high as $4.57/gal, when it could be obtained at all. In February, the Bismarck Tribune reported that an elderly woman froze to death in a rural mobile home, when she couldn’t afford to fill her propane tank. Meanwhile, in the western part of the state, oil fields flared nearly 300 MMcfgd, almost 30% of the associated gas from the Bakken shale.
Space POV. On the NASA Earth Observatory website (earthobservatory.nasa.gov), check out the images of the middle U.S., at night, that you can find. The Texas Eagle Ford region, looking like a grand crescent, is clearly visible south of San Antonio, filled with lights and hundreds of brilliant flares. Similarly, look at the northwestern corner of North Dakota. Just like the Eagle Ford, the area is sparsely populated and lit up like a major metropolis. The Bakken shale’s roughly 1,500 active oilfield flares put out nearly as much light as the city of Minneapolis, 600 miles to the southeast.
Nobody wants to throw away money, and it’s reasonable to assume that most companies would sell the gas, if they could. More than 70% of Bakken gas is marketed, after all. There is a notorious lack of infrastructure—not just pipelines, but compression and processing facilities. The problem came about because of the speed of development. North Dakota’s shale oil boom caught everyone a bit flat-footed. The region’s crude production went from just 18,000 bpd in 2007 to 1.0 MMbpd today, more than a 50-fold increase. Gas production rose along with oil, ultimately overwhelming the existing pipeline capacity.
In a report last year from the non-profit industry group, Ceres (“Flaring up: North Dakota natural gas flaring more than doubles in two years”), the authors point out that the issue is not just the flaring of methane. The Bakken gas also contains large amounts of highly useful NGLs, like propane and natural gasoline, making it potentially four times as valuable as natural gas produced elsewhere. Even so, the crude oil is the much richer target, and financial incentives to invest heavily in infrastructure to utilize the gas are just not there. Add to that the fact that North Dakota allows a company to flare gas without restriction or penalty—royalty-free and untaxed—for up to a year after production begins. And after that, the company can continue to flare, if it can prove that it can’t capture the gas economically.
Texas: self-inflicted wounds. In the Eagle Ford region, gas flaring has also increased dramatically in recent years, but no one is quite sure by how much. In a four-part investigative report for the San Antonio Express-News, called “Up in flames,” reporters John Tedesco and Jennifer Hiller found that, since 2009, gas flaring and venting in Texas oil fields has increased 400%, and the Eagle Ford region is the main contributor. This is less on a percentage basis than in the Bakken shale. But based on preliminary records from the Texas Railroad Commission, Eagle Ford operators during 2013 vented and flared as much as 35 Bcf of associated gas. The commission does not separate venting from flaring—an important omission, because CO2 from burned casinghead gas is considered a less significant pollutant than gas simply vented into the atmosphere.
Just as in the Bakken, the problem is the oil/gas price differential, and the lack of pipelines. It’s not just that the financials for pipeline construction don’t add up. A grudge match between the Texas government and the EPA has led to increased delays in pipeline permitting. The problem here is that federal pollution rules require permits for pipeline infrastructure—not the pipelines themselves, but compressor stations and processing plants. Texas sued the EPA in 2010, challenging the agency’s right to regulate CO2 and other greenhouse gases. The lawsuit was dismissed in Federal appeals court in 2013, but, in the meantime, the state had blocked the Texas Commission on Environmental Quality (TCEQ) from issuing greenhouse gas permits. This move effectively delayed critical pipeline construction in the Eagle Ford and Barnett shale regions.
The Texas Legislature finally authorized the TCEQ to issue greenhouse permits, but logjams reportedly remain.
Solutions in technology. In North Dakota, state regulators recently introduced rules intended to reduce overall flaring to 10% by 2020. ONEOK Partners, one of the largest gas-gathering operators in the state, announced plans to invest $605 million to $785 million in a new natural gas processing facility and related infrastructure in North Dakota. The company expects to increase its gas processing capacity to 590 MMcfd by the end of 2015.
Hess recently completed expansion of its Tioga gas plant, which it says will reduce flaring at its own Bakken operations to a target of 15%. Hess, along with Gtuit and Corval Group, is also developing a new mobile NGL extraction system, to collect NGLs at the wellsite. Statoil is working with General Electric to reduce flaring by turning gas into CNG at the wellhead. The system, called “CNG in a box,” removes NGLs for transport to market, and compresses natural gas to fuel rigs and other equipment.
In the long view, reduction of flaring is not just a pollution issue or a monetary issue. Ultimately, it’s about waste of a critical resource. Gas flared today can’t be used to heat a poor widow’s trailer tomorrow. 
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