Applying Creativity to a Byproduct of Oil Drilling


WATFORD CITY, N.D. — Viewed from outer space, the 1,500 blazing oil well flares burning off excess natural gas illuminate the plains of western North Dakota more brilliantly than Minneapolis hundreds of miles away. Visible even from space, more than 1,500 natural gas flares illuminate the prairie in the Bakken oil field in North Dakota, for lack of gas pipelines. The gas being burned in the Bakken field is a byproduct of a frenzy of oil drilling in isolated areas where there are too few gas-gathering lines and few limits on drilling. In total, the excess gas could heat a million homes, releasing roughly six million tons of carbon dioxide into the atmosphere every year — roughly equivalent to three medium-size coal-fired power plants. That level of emissions is three times as great as only two years ago, outraging environmentalists, encouraging landowners to sue oil companies and prompting lawmakers to push for tighter regulations. But for A. Lance Langford, Statoil’s vice president for Bakken development and production, and other energy executives, the flaring problem can be the mother of invention. “You take a problem and you turn it into an opportunity,” he said. “We’re trying to think outside the box.” Oil companies and other industries are intensifying their efforts to stem the flaring, like building more pipelines and gas processing plants, planning new fertilizer factories that use natural gas as a feedstock and converting rigs and other equipment to use natural gas as a fuel. But so far, the companies have been losing ground, and will probably not reduce the amount of flaring to the level of other oil-producing states for at least another five years. Statoil, the Norwegian oil giant, is teaming up with General Electric here in the wheat fields of McKenzie County, the heart of the Bakken field, on a low-cost prototype it hopes will be used as far away as Africa and Asia, where gas now flared could be gathered for cooking and other uses. The first step of the process is to strip out of the gas valuable natural gas liquids like butane and propane, which can be used for petrochemical production. The liquids can then be put in pressurized tanks and delivered by truck to processing plants. The rest of the gas can be compressed and stored in what G.E. calls “C.N.G. in a box.” The device was originally designed to be a mobile natural gas station to fill up cars, trucks and buses. But Statoil plans to use the boxes to fuel equipment, particularly drilling rigs that have already been converted to replace 40 percent of the diesel they burn with gas. By Statoil’s calculations, if all the rigs in the Bakken were converted to run even partly on natural gas, more than 60 million cubic feet of natural gas — or roughly a fifth of the gas now being flared — could be saved every day. Statoil is also bringing new equipment to the Bakken for fracking — the high-pressure injection of water, sand and chemicals that forces open the deep underground shale rock — that can also run on a mix of diesel and natural gas. The costs of the program are modest. A General Electric compression box costs about $1.1 million, and the mobile processor costs about $500,000, according to Statoil executives. The company hopes to get the first pilot running by early January and have up to eight compression units running by the end of 2014. “If we can show a successful pathway to adopting natural gas in high-horsepower applications — rigs, frack crews, heavy duty trucking, railways — that will increase demand,” said John Westerheide, the strategic marketing leader for unconventional resources at G.E. Oil and Gas. And if demand goes up, energy economists say, natural gas prices will also go up and further increase incentives to capture it. Other companies already have their own plans to make the gas more of an economic asset. The railroad giant BNSF, which now ships the majority of Bakken crude oil out of the state, is preparing to test North Dakota’s abundant and cheap natural gas as an alternative fuel to far more expensive diesel for its locomotives. And two companies have begun planning construction of two giant fertilizer plants, representing nearly $3 billion in investments in the state, which would use North Dakota’s natural gas as a feedstock and supply farmers in the Dakotas, Minnesota, Montana and Canada. Michael Hosford, global general manager for unconventional resources at G.E. Oil and Gas, said he hoped to quickly work out the kinks in G.E.’s venture with Statoil and expand it globally. “It’s not North Dakota-bound; it is all over the world,” he said. “It’s China; it’s Nigeria. It’s very much an international concern.” At a Statoil site workers install processing equipment intended to make some of the gas usable as fuel or fertilizer feedstock. Natural gas flaring around the world results in emissions of 400 million tons of carbon dioxide a year, according to the World Bank. That is equivalent to the emissions of 77 million cars, and much of that wasted gas is produced in countries where natural gas could provide power to people who subsist without electricity. But the problem here in North Dakota remains nettlesome. The effort to stem flaring is complicated by the sheer size of the Bakken — which at more than 15,000 square miles is the most extensive oil field in the country — and the frenzy of drilling that has doubled oil production in the last two years to a million barrels a day. So many wells are being drilled that energy experts expect an additional 40 percent increase in the gas produced in the field by the end of 2015. Industry executives say they will eventually bring the flaring under control, though that might not happen until the 2020s. “By the end of 2015, you’ll see a significant decrease in flame volumes,” said Brad Borror, a spokesman for Oneok, the leading gas pipeline and gas processor company in the Bakken. Justin Kringstad, director of the North Dakota Pipeline Authority, said the companies were building pipelines “at an incredibly fast rate.” More than 2,400 miles of pipeline, most for natural gas gathering, were built in 2012, a pace that “has caught up to the pace of drilling and now is actually a little bit faster.” At the same time, processing plant capacity has doubled since 2010 and six gas processing plants will be either built or expanded in North Dakota in the next few years, increasing processing capacity from a current 1.01 million cubic feet of processing capacity to nearly 1.7 million cubic feet of capacity by the end of 2015. Nevertheless, producers are flaring three times as much gas as only two years ago, even as the percentage of produced gas flamed into the sky has decreased to 29 percent, from 36 percent. “The production and development is outpacing the safeguards to the environment,” said Wayde Schafer, conservation organizer for the Sierra Club in North Dakota. Under current North Dakota law, oil companies can flare gas for the first year of a well’s production, which is often the time when the most gas bubbles up. If they can show that it is not economically feasible to connect to a pipeline after the first year, they can get an extension and continue flaring. “It will take a combination of entrepreneurship, the companies being embarrassed and tighter regulation,” said Connie Triplett, a Democratic state senator pressing for tighter controls. She characterized a recent move by the Legislature to offer tax incentives to companies that capture rather than flare gas as “a baby step” in the right direction. “I always worry about regulations,” said Mr. Langford, Statoil’s vice president. “If we need to hyper-focus, then let’s really hyper-focus on flaring now and accelerate. We’ll end up with technologies that hopefully we can pass on.”



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