Advances in horizontal drilling and hydraulic fracturing have nearly tripled oil production in North Dakota, making it the second-largest oil producing state in the United States after Texas, with a daily oil production of over one million barrels. With increased oil production has come a booming economy, one of the lowest unemployment rates in the country, and increased production of natural gas at the wells. But what hasn’t come quite as naturally is the infrastructure capable of connecting all of North Dakota’s wells to the natural gas market. As a result, instead of seeing a similar meteoric rise in natural gas profits, North Dakota is instead experiencing an increase in flaring.
Unlike oil, which is often trucked or transported by rail, natural gas is almost exclusively transported by pipeline. As reported in the Los Angeles Times, Texas, which has a well-developed natural gas pipeline system to accompany its oil production, flares less than 1% of gas produced. Oil and gas production data published by the North Dakota Industrial Commission, on the other hand, reports that operators in North Dakota have been forced to flare more than $1 billion of natural gas, or about a third of current Bakken gas production, a year.
North Dakota has been trying to address its flaring issue with new regulatory practices. In June, the North Dakota Industrial Commission, which regulates the drilling and production of oil and natural gas in North Dakota, began requiring operators to submit gas capture plans with all permit applications. State regulators also issued an order in July allowing the commission to cap production at any wells that exceed the state’s gap capture target. Both the permit requirements and gas capture target are part of North Dakota’s plan to capture 74% of gas production by October 1, 2014, and 90% of gas production by 2020.
Ultimately, though, gas capture plans can only do so much. The best, and most practical, way to reduce flaring in North Dakota is to build more pipelines. This is not a surprise for the industry or the state, both of which are already taking steps towards building up infrastructure. Plans to construct more than 1,000 miles of pipeline and additional processing plants in North Dakota have already been submitted. North Dakota, meanwhile, established the Oil and Gas Research Council in 2003 and the North Dakota Pipeline Authority in 2007, both of which are specifically tasked with facilitating the development of pipeline facilities and targeting the utilization and capture of natural gas. North Dakota has also been revamping its laws to expedite the permit approval process for pipeline infrastructure. One recent example of permit expedition is HB 1147, passed in January 2013, which allows operators to adjust the route of gas transmissions lines within designated energy corridors without having to undergo additional public notice and hearing.
Despite all of North Dakota’s new initiatives, however, tens of thousands of wells in North Dakota still lack a connection to any pipeline or processing plant, and that number will only rise as more wells are drilled. Even wells that are connected to infrastructure are experiencing flaring, as higher pressure from newer wells causes downtime and flow back at existing pipelines.
Solving the pipeline infrastructure problem in North Dakota will require more than just working with the state. What’s needed is cooperation between stakeholders at all levels. Land in North Dakota is often bound up in a unique jurisdictional tangle involving local, state, federal, and tribal authorities who are each required to conduct or participate in a lengthy review process prior to permitting any pipeline project. These reviews include environmental assessments required under the National Environmental Policy Act, or NEPA, as well as historic preservation review and consultation mandated by Section 106 of the National Historic Preservation Act.
Due to the rapid growth of the oil and gas industry in North Dakota, federal, state, and tribal authorities, have been forced to address these historic preservation and other NEPA issues on anad hoc basis. And while flexibility is important, governmental authorities and stakeholders would be better served by the development of best practices for NEPA evaluation and Section 106 consultations that can be consistently applied to emerging pipeline projects. Issues such as the form of approval documents, the appropriate way to respond to inadvertent discoveries, the scope of tribal consultation, the identification of all necessary parties in a tribal consultation, the acceptable methods for mitigation and avoidance of historic properties, the designation of historical districts, and sharing of relevant information between parties involved in the process can and should be routinized and simplified so that all parties can manage timing, understand their roles, and work together more efficiently.
One way to do this could be the development and use of a standardized state‑wide, procedural Programmatic Agreement for oil and gas pipeline projects under Section 800.14(b) of the NHRA regulations. See 36 C.F.R. § 800.14(b). Programmatic Agreements help establish uniform procedures for addressing these issues and managing the expectations of all parties. They are used in a wide array of projects and are particularly effective in addressing linear development projects like pipelines and roads.
North Dakota stakeholders need to address the pipeline approval process systematically, and they need to do it now. Without a comprehensive, categorical procedure in place to facilitate pipeline development, trying to lay more pipe in North Dakota will unnecessarily waste a substantial amount of stakeholder resources and time. If North Dakota stakeholders can bring together federal governmental authorities, tribal leaders, and energy industry representatives to establish a usable, procedural Programmatic Agreement, they might be able to turn what is now a flaring problem into a natural gas industry advantage.