March 21, 2014

Nonmarketed natural gas in North Dakota still rising due to higher total production

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Natural gas production in North Dakota's portion of the Bakken Shale formation has grown significantly, alongside the rapid rise in oil production in the state. Natural gas production has outpaced additions to the state's gas pipeline capacity and processing facilities. As a result, the amount of nonmarketed natural gas output continued to grow in North Dakota through the end of 2013, rising to an average of 0.31 billion cubic feet per day (Bcf/d), almost double the 0.16 Bcf/d levels in 2011, according to the North Dakota Department of Mineral Resources. The temporary closure of a processing plant at the end of the year led to an increase in both the volume and the percentage of nonmarketed natural gas that continued into 2014. Most nonmarketed natural gas is flared into the atmosphere.

Natural gas that is flared releases carbon dioxide as a byproduct of combustion. Carbon dioxide is a less powerful greenhouse gas than methane, the primary constituent of natural gas. From 2008 to 2012, North Dakota accounted for 0.5% of total gross natural gas withdrawals in the United States, but the amount of gas that producers flared in North Dakota accounted for 22% of all natural gas that was either flared or vented in the United States, according to U.S. Energy Information Administration data.

While higher natural gas production has led to increased flaring in North Dakota, nonmarketed gas as a percentage of total production there decreased from 37% in 2011 to 33% in 2013, according to state data. Several projects have come online in the past two years to improve North Dakota's ability to bring new production to market:

• Completion in January 2012 of the 0.10 Bcf/d Garden Creek processing plant in western North Dakota, near Williston.
• The August 2012 completion of a pipeline connecting processing plants in northwestern North Dakota to the Northern Border Pipeline, and the 0.10 Bcf/d Stateline II natural gas processing plant that connected to this line in May 2013.
• Authorization of the Tioga Lateral pipeline in June 2013 to transport 0.13 Bcf/d of natural gas from a processing plant in Tioga, North Dakota, to a connection with the Alliance Pipeline. Alliance can then flow this gas to Chicago, Illinois. Although the pipeline began operating in September 2013, its full effect won’t be felt until the Tioga processing plant completes its expansion by the end of March. The expansions required a temporary shutdown of the processing plant starting in November 2013, which contributed to an increase in nonmarketed gas to 39% of total production through the end of 2013 and into 2014.
• The application of General Electric’s CNG In A Box system. This system uses a compact compression-and-cooling station to convert natural gas into compressed natural gas (CNG), which can serve as fuel for vehicles and equipment. General Electric is using this system in North Dakota together with Norwegian firm Statoil. Statoil transports the CNG on tube trailers to fuel its drilling equipment that is capable of using either diesel fuel or natural gas.

The state of North Dakota currently plans to reduce its percentage of nonmarketed gas steadily until eventually reaching a goal of 10% by the fourth quarter of 2020 as processing plant and pipeline capacity expansions continue, according to a January 29 report from the North Dakota Petroleum Council. One critical project for continued reductions is a proposed 375-mile, 0.4 Bcf/d-pipeline to transport gas from the Charbonneau Compressor Station in western North Dakota to an interconnection with the Viking Gas Transmission pipeline in Moorhead, Minnesota. Open season for capacity commitments on construction of the pipeline began on January 30. Assuming that sufficient commitments are made, construction is estimated to begin in 2016 and to be completed in 2017.

Additional important projects include:

• Two large proposed fertilizer plants that would together use about half of the volume of natural gas flared. One of the plants will require 0.08 bcf/day of natural gas as feedstock to produce nitrogen. The other plant, which will produce different fertilizer, may use a similar amount of natural gas.
• Three small (20,000 barrel per day) proposed refineries that would use a small amount of additional natural gas.

Another way to to reduce nonmarketed gas in North Dakota is to increase natural gas consumption in a range of residential, commercial, industrial, and transportation sector applications within the state.

Principal contributors: Michael Ford and Neal Davis