North Dakota is now the country’s second largest producer of oil behind Texas thanks to technologies like horizontal drilling and hydraulic fracturing, meaning previously hard-to-reach shale gas and tight oil can be accessed and brought to market.
But the relatively quick ramp-up in production has stressed the nation’s oil and gas infrastructure leading companies with a decision between investing in oil infrastructure (which bring a higher return) and investing in natural gas pipelines and compressor stations. Companies are increasingly trucking oil out on truck or shipping oil via rail lines (like the train that crashed in Quebec this summer).
Natural gas, on the other hand, faces two problems. For some sites, there are no pipelines or compression stations to take the gas from the wellhead to market. Other sites are connected to pipelines, but those are already at capacity and face congestion issues. Faced with this dilemma, energy producers are investing in getting oil to market, which fetches up to 30 times more than natural gas. So rather than laying new pipeline, companies are choosing to flare off natural gas instead.
The result is that between May 2012 and May 2013, North Dakota producers flared off roughly 30 percent of all natural gas coming out of the ground – a loss of $1 billion in fuel and the GHG emissions of adding 1 million cars to the road, according to an analysis by the sustainable development organization Ceres.
The practice of flaring has grown so much in North Dakota that the United States is now one of the top 10 flaring countries (alongside Russia, Nigeria, and Iraq).
North Dakota regulators have set a public goal to reduce flaring to at most 10 percent by an unspecified date. Currently under North Dakota state law, producers are allowed to flare for the first year of a well’s production, and apply for an extension if they can demonstrate that capturing the natural gas is not economically feasible. North Dakota regulators granted ninety-five percent of extension requests over the last two years.
Nationwide, flaring rates are much lower than in North Dakota. The U.S. Department of Energy estimates that 1 percent of natural gas is flared, while Texas flares just 0.4 percent of its natural gas.
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