Bakken Drillers Going Green to Make Green

Oil drillers in the Bakken are taking steps to reduce gas flaring in order to capture more natural gas for sales. Flaring has become a major problem in the Bakken. The lack of pipeline infrastructure has been a limiting factor for drillers in capturing associated gas. With oil a much more lucrative fuel to chase, operators have drilled at a frenzied pace to get at it, but that often means they have excess gas on their hands.

On the whole Bakken operators have taken some moderate steps to capture more associated gas. In September 2011 drillers flared 37% of the gas extracted, but by March 2013 that ratio was down to 33%. To be sure, flaring is still at elevated levels. And flaring is way above what environmental groups want, and far from North Dakota’s long-term goal of flaring 5% to 10%. Current regulations allow drillers to flare for one year, after which they have to capture the gas and either sell it or use it. But the lack of pipeline capacity means that many can waive that requirement because it is too difficult to do.

Related Article: Albany Orders Moratorium on Bakken Crude

According to Seeking Alpha, there are two companies that may go beyond the requirement and aim for zero flaring. The investment web site argues that Continental Resources and Whiting Petroleum are making huge progress in the reduction of flaring, an integral factor in why they are two of the most profitable companies in the Bakken. Continental has halved its flaring, which contributed to a 72% gain in net income in 2012. Whiting is also reducing its flaring, and has investments in natural gas processing plants as well. These two companies are demonstrating that capturing and selling natural gas instead of flaring it is paying off, and hopefully other operators follow their lead.

By James Burgess of Oilprice.com