Key Factors for Flaring North Dakota Industrial Commission

North Dakota Industrial APPENDIX B
Commission
Key Factors for Flaring
NDPC Flaring Task Force
• Shale Oil production profile - high surge of initial
January29, 2014 production followed by steep declines

• Unique Liquids-Rich Gas
• Time Needed to Build Infrastructure & Weather

Constraints
• Size of the Bakken
• Technology Outpaced Production Expectations
• Easements and ROWs are Challenging

NDPC Flaring Task Force Infrastructure and Investment

• 500 member companies of NDPC
o Responsible and efficient development of NO
natural resources

• NDPC completely supports the State flaring goals
o Reduce flare volumes
o Reduce the number of wells flared , and
o Reduce connect time period from first gas
production to marketing gas sales

Unique, Very Focused Current Infrastructure Statistics

• Unique for Industry to work holistically New Infrastructure Since 2006
- Not normal, companies are fierce competitors - • 9,555 miles of gas gathering pipe
upstream and midstream • 1.259 BCFD of gas processing

• Started the task force last September Export capacity (downstream of plant)
• Consists of 35 Industry experts in natural gas o Residue gas - 2.0+ BCFD
o NGLs- 120-150,000 bbls/ day
gathering, processing, and transport
• Met over 20 times since Sept. - very focused
• Tribal subcommittee has met 8 times since Nov

1

1/29/2014

Industry Investment to Date Entire State Flaring Statistics

• Industry Investment in North Dakota • North Dakota Pipeline Authority data
o Over $6 Billion (Nov)

• Preliminary numbers since January 2006 • Entire State
o Gas gathering- wellhead to plant -Flaring 29%, 306 MMCFD of state
o Plant Processing- stand alone gas production
o Export capacity for residue gas and natural gas • Hess Tioga plant startup
liquids (NGLs) -60% is from 216 well sites

11:.1 Future Investment :-= Non-FBIR/FBIR Flaring Statistics

• Approved , publically announced (a pprox.) • Private and State Lands (excludes FBIR)
• 2014-2015 -238,228 MCFD
• Oyer $1.7 Billion new infrastructure announced -Flaring 27% of non-FBIR production
• 1,000+ miles of gas gathering pipe
• 400 MMcfd gas processing • Ft. Berthold Indian Reservation lands
• 75,000 bbls NGL export -57,832 MCFD
• 400 MMcfd gas export -Flaring 40% of FBIR production
• 400 miles of export pipe

Flaring Statistics Unique challenges on the FBIR

ROWs are very slow to get - consent from landowner, Tribe
More permit scrutiny- 3 federal agencies must approve
(BLM , BIA, USFWS)
Tribal policies conflict with getting pipelines to well locations
- Developing a conditionally-assignable ROW form - 13

pages long
- 112 mile setback for all pipel ines and compressors from

any occupied structure
Topography and Lake Sakakawea make gas gathering
systems challenging to operate

2

1/29/2014

2000000 l' f"ut\l.. lnYestmenl

- NOPACI.M1Foree.Mt•

1800000 ,,'--"~"'-"'""""""'c.o"'-1"-"''"""'""---="""'-""''"-"'""------' _,.,- ~- -"'-'-

1600000

1400000

1200000

0
~ 1000000
:lE

800000

Future Capture Targets 600000

85% Capture in Two Years 400000 .--
200000 T
- Capture 74% by 4th Qtr. 2014
• Recent processing expansion, BMPs ~~~:l::1:1~~::1:1::3:1~~~:1:1:1:!l~!!l~o;:;o;;!!I!!I:!I~~~~RI'I

- Capture 77% by 1st Qtr. 2015 iHit!lHit.ltt!lHit.liHiHiHiH
• Continue capacity build out • NDP.i.lX-Dtoer--.kcx..f.,l.l,_fDotr...-.,-.,~_C.W..I..I.), I-­
• Operational effici encies
Time Delays to Connect
- Capture 85% by 181 Qtr. 2016
• New recently announced processing plants
• Value added North Dakota markets

90% Capture by 2020 Example Connect Times

.....with potential for 95% capture The typical process and time for connecting a well or multi-well pad to
the gas plant is as follows:
• Th is plan allows for increased future oil - Identify well(s), negotiate and execute gas processing agreement:
production wh ile reducing flaring
90 days (try to negotiate the agreement before the well is spud and
• Achieving this goal, requires fu ll engagement duri ng drilling so facilities are ready to ca pture the first production
by the industry, state, counties, NDIC, tribe, after well stimulation)
and landowners to implement this plan - Once agreement is executed, apply for county permrt: 30 days
- Once permit is received, acquire right of way: 30-180days
- Upon ROW acquisition, construct gathering lines and appurtenant
facilities: 30 days
Total time: up to 180 days, if no problem with ROW.

Note: Typically. can connect a well in 90 days (weather permitting) ~the
contract is already in place.

3

1/29/2014

Delays to Gas Connection NDPC Flaring Reduction Recommendations

• Single Biggest Challenge to connect gas • Gas Capt ure Plan
• Regulatory Co nsequences
- Securing landowner permission for connection activities • Midstream Pla nni ng and Tracking
- up to 180 days or longer • Gathe ri ng Li ne Oversight
• Right s of Way
• Biggest obstacles and time delays • State Actions
• Remote Capt ure Tech nologies
- Delays in zoning by count ies and townships for • Monitoring and Reporting
midst ream facilit ies

- Short construct ion season/ weather
- Limited number of available const ruct ion crews
- Review of permits for nat ural gas fu eled equi pment

New Focus on Flaring Reduction 11(1l; New Permit Requirement

• Management focus to reduce flaring • Gas Capture Plan (GCP)
• Focused internal effort to reduce flaring -Forces gas capture planning prior to drilling
- GCP may include at the discretion of NDIC:
-Better drilling, completions, and faci lities - Location map gathering system
coordination to redu ce flaring connection , processing plant(s) identified
-Fi owback strategy (rate, duration, plan for
-Communication with midstream multi-we ll start up)
-Evaluation of gas utilization before midstream - Current system capacity and utilization
-Increased emphasis on obta ining ROW -Time period for connection

, Sample Gas Capture Plan

O•• Pipelin e l nf'orn"'etlon

•-tto:.::,o;;•;~~";;~~ · env

McEK• n•'- e o un~ . Noo1h Da..o""-

Proposal to Meet Reduction ____.___-·- ._-_, ....
Targets

o-.....:;::=:fr.:;.;:7]~ ~~5~ .··-~~·--t

.... ......~ w.~

4

1/29/2014

Gas Capture Plan Milestones Gathering Line Oversight

• June 1, 2014: All new APDs must have a • Nort h Dakota will be t he f irst in the nat ion to
GCP regulate gathering systems, effect ive April1,
2014 (House Bill 1333)
• For all existi ng f laring wells, the producer will -18,000 miles of existing gathering line will
subm it a GCP be regulated
-September 1, 2014: large volu me wells (based -New electron ic mapping requ irements
on Nov NDPA data) 60% is f rom 216 wells >300 -$75 MM cleanup fund
MCFD, 50% connected to sales -Pipel ine mediation
-March 1, 2015: all other wells f laring longer
than 90-days, excluding ma rgina l wells

Regulatory Consequences 111.:1 Pipeline Hotline

At t he discretion of NDIC, penalty for failure to comply • NDIC develop and manage "hotl ine" for
- Failure to submit GCP reporting surface owner issue related to
pipelines
• New wells - suspension or denial of permit
• Existing wells- curtail product ion where no det riment • Establish follow-up mechanism with
company and surface owner to ensu re
to well or reservoir quality control
- Failure to comply with GCP
• Provide landowner wit h easy notificatio n
• Curtail product ion system for problems and concerns
• Not meeting flowback strategy
• Mitigating circumstances may allow extension (i.e.,

economic evaluation, operator's overall capture rate,
ROW, safety, weather, work crews, etc.)

Midstream Pla nning and Tracking ROW Task Force

Midstream companies meet with NDIC on a regular basis ROW Task Force to address biggest time delay challenge
(i.e., annual, bi-annual) to status operations and updates - Discuss and review potential energy corridors, section
Suggested reporting to include:
line easements, legislation to improve ROW access to
• Percent gas captured by gathering system reduce flaring
• Gathering forecast by gat hering system - Stakeholders to include:
• Stat us plant processing capacity and gathering
• NDIC, North Dakota Pipeline Authority
capacity with future obligations and capt ure targets • Attorney General due to legal issues
• Utilization and downtime/i nterruptions of service • State Energy Impact Coordinator
• Counties
-Field compression downtime 1 Plant • Landowners groups
• Indust ry members, both upstream and midstream
downtime/ maintenance

5

1/29/2014

State Actions 90% Capture by 2020

lncentivize rapid build out capacity for gas infrastructu re • This plan allows for increased oil production
• Property tax incentive, payment in lieu of taxes while reducing flaring
• Low interest loans (electrical transmission), etc.
• Production tax credits for producers • Possible target of 95% capture

lncentivize intrastate value added markets
• LN G, CNG , petrochemical, fertilizer plants, technology
innovation
• Develop Infrastructure Development Fund

Support dense phase, high pressure export pipeline
• Major investment - approximately $3 billion
• Long lead time - approximately 3 years construction time to
mid-continent markets
• NDPA is authorized by statute to take up to 10% of f irm
capacity

lncentivize Remote Capture Tech I ~!:= Up To 95% Capture Possible

• EERC evaluation process However,
• EERC pilot and scalability testing achieving these targets, requires full
• Increase funding for the Oil & Gas Research engagement by the state, counties, NDIC,
tribe, landowners, and industry, to implement
Council, focus on value added markets
this plan
-Utilize Empower Comm ission Va lue Added
Natural Gas Study

Flare Reporting and Monitoring

• Non-FBI R/ FBI Rflaring tracked separately
• Revise current NDIC gas production and sales

report to include:
-Non-routine flaring operations - safety, power

outages, pressure control, pigging, etc.
-Well testing and flowback operations
• NDPA report on target capture status to NDIC
- 4 rd Qtr. 2014
- 2nd Qtr. 2015
-1st Qtr. 2016

6

1/29/2014

Insure Clear, Continuous Communication Gas Pi peline lnfo nnat io n

• Internally Increased Density -C razy Man Field

Geology Towntl'tlp 16SN · Range ltW
Land McKenziiiWIIIIame Count iH, North OlN!ota
Operations (Drilling , Completion , Production)
Resource Development ~o.tllllnr: ~
Marketing
Project Development ~~ ff-O..Gol"'""l'"""' ct .O io4k

Plann ing/Finance Anlklpolod-.•ot t"e-now: tttl"rocU;fion

' Externally G.loMP<ocnNd.,.: WIIIfordcwGordlnero.t l

Regulatory Agencies o.t'-ingpiptllinac-'!-,:~100M M cfd-GatdoroC:ruiii100 MMcfd
Local Agencies
Surface Owners C - 11 •WIIfllnj 5QIII McfdMCIGat.... CIHI< I 79 111 Mcfd
Gas 1Oil/ Water gatherer and/or purchaser
INDEPENDENT "1E,_\NS I 1
37 I Ill
1

INOEiJENOENT ME~o\NS ( I II' I'

Planning Track Performance

' Construct and maintain rig schedule to meet corporate • Establish metrics to quantify performance
goals
Percent and volume flared from wells that are connected to a
Exploration or "step-our testing purchaser
• Well density testing (both horizontal and vertical separation) Percent and volume flared requiring connection to a purchaser
• Full field development
a Work with mid-stream provider to analyze issues affecting
• Prepare "Gas Capture Plan" exhibit identifying pertinent connected wells
information for use at regulatory hearings
Plant capacity
• Detennine market status (Dedicated to mid-stream or not) Compression capacity
• Determine mid-stream's ability to meet timeline and production rates Gathering system sizing
Operational issues (i. e. fiuid buildup in lines, power outages, etc.)
' When feasible, adjust drilling timel ine to accommodate New well IP's overcoming planned or available capacity
connection or compression/plant capacity timing
INDEPENDENT "'1EANS I I Ill
• Provide periodic production forecasts• to mid-stream
gatherer for existing and planned wells or well pads

Gas Pipeline Information Track Performance (continued)

640 Acre Spacing Analyze issues with wells needing a connection
S.Ctlon 17 • TOWMhlp 144/111 • RMge HW
Issues outside CLR's control
8 11Ungs County, North Oekota ROW/Landowner

I I ) • Non-commercial volume
• Gas Quality
-- - Issues within CLR's control
!"-,
r-, Pipeline connected and pending activation
Pipeline connection scheduled for future date
r=.\r- I - Request contract release (stranded well on dedicated acreage)
I Seek new mid-stream market
oaHGai,.,.., ClniOir No timeline or resolution determined
39
Dkl-tkOII'IQMo.thenrlt-:0.75Miln a Develop solutions with timelines
!
"""'*"'"HI•ort"ou....., lttPI'oW:don INDEO ENDENT ~EANS I I Ill

O...!tM-•ot iii: Gr"~
,._ c~ tOMMdd

-- . - - - - - - - - - - - -- --- - 1

IN OE iJ ENDENT 1'-1EANS ( I 111

7

1/29/2014

NO Bakken Non-Connected Well Analysis

• August 2013 Operated Wells
133,434 mcf

• 75 wells

'I N O E iJ EN DENT M [ ,_\ N S ( I 111

Success Gained Through .. . Solicited Technical Information
Regarding Remote Capture Technologies
1 Clear communication
Prepared and distributed a request for information (RFI)
Engaging all stakeholders describing the nature of North Dakota flare gas and
• Providing immediate notification of delays or changes to plans soliciting participation from vendors.
• Understanding one-another's limitalions RFI describes the quality, quantity and distribution of
flared gas in North Dakota, providing vendors the
• Planning information needed to tailor their offering to the unique
conditions. Offers must:
Providing development plans for a 2+ year period to meet design
and construction lead-time requirements - Accommodate high concentrations of natural gas liquids.
Reviewing volume forecasts by specific gathering areas - Turn down capacity and mobility to accommodale production

1 Tracking performance and progress decline.
- Be operable in extreme climates.
Hosting quarterly performance rev iew meetings - Account for large geographic area.
Engaging CLR and mid-stream teams in open dialogue
Reviewing perfonmance metrics and modifying plans ·~
Discussing new developments and/or changes
Assisting gatherer with problematic issues, such as ROW
acquisition and reasonable surface use within the lease boundary 4-i

I N D E .:;J END ENT M E A N S \ l Ill I

But, If We Go Too Far with Restrictions, EERC Remote Capture Evaluation
we may...
Created a database to assemble technical information
• Limit development with multi-well pads, which are critical to: about vendor technologies and services. Thirty
companies have responded to the RFI to date.
Reducing environmental footprint Review of technology information is ongoing :
Reducing tnuck traffic - Match technology with conditions.
Reducing dust - Combine complementary technologies.
Improving safety of the community - Adapt technologies, operations, and business models

• Discourage private investment (O&G support operations, to accommodate conditions.
housing, hotels, restaurants, retail, etc.) Web-based database is ava ilable to view company and
technical information.
1 Decrease the reservoir recovery efficiency www.undeerc.org/flarinq solutions/Search.aspx

• Lose substantial revenue for the mineral interest owner, . EE!'!I; ..
operator and the State of North Dakota

I N D E P E N DENT r"1 [ A N S I "

'

l Ill I •

8

1/29/2014

Geograph ic Distribution
of Locations with
Flaring Rates Greater
than 300 MCFD

June 222 Locations
July 270 Locations

July 2013

·~ 216locations Flaring 60% of Total Geographic Distribution
Flared Gas at Rates of >300 MCFO. of Locations with
Flaring Rates Greater
"' than 300 MCFD

June 222 Locations
July 270 Location s
August 242 Locations

August 2013

Geographic Distribution Geographic Distribution
of Locations with of locations with
Flaring Rates Greater Flaring Rates Greater
than 300 MCFD than 300 MCFD

• June 222 Locations June 222 Locations
July 270 Locations
...~·· ·: 1_ Augu st 242 Locations
"'.· · ~ . .;; September 237 Locations

June 2013 September 2013

9

1/29/2014

Geographic Distribution Flaring Statistics Summary Points
of Locations with
Flaring Rates Greater Understanding the quantity, quality, and distribution of
than 300 MCFD flares is critical to selecting effective remote capture
technology.
June 222 Locations
July 270 Locations 60% of the total flared gas is coming from locations
August 242 Locations flaring at a rate of 300 MCFD or greater.
September 237 Locations
October 227 Locations 216 locations (4% of total locations) flare at a rate of
300 MCFD or greater.
October 2013
Historically 50% of flaring is occurring at locations with
gas gathering and 50% at stranded locations.

- Production has exceeded expectations, leading to

constrained gathering systems and flaring from

connected locations. ,.
• IBC --· ----·. -

Geographic Distribution Technology Poss•blc lmp01ct to Pros Cons
of Locations with NGL Removal Flared Volume Beat deployed dunng t'nt
Flaring Rates Greater ea.. of eMployment 12 months of openation
than 300 MCFD Diese! R~ent 7%reduction e... of Of)lntion lncrenes truck traffic,
deployed lltthe216 Extracts hiQhest·value liquids storage
June 222 Locations ··--Loc.l Load, Diesel largest flaring product from rich gn limited applicable sites
July 270 Locations locations
August 242 Locations Replaoomont Fuel eo&t ..vings Lrnitedapplicableaites
September 237 Locations 0.5% reduction Eau of deployment
October 227 Locations Power production at Ease of open~tion Low demand for fuel
November 216 Locations 100 one-well locations Infrastructure and vehicle
Reduces ov.ren electrical oonveraion takn time
November 2013 9%reduction load growth 900trucks
Power production at Eau of deployment 9 truckslday/MMCFO
1001-MWiocations Ease of operation
.".".""-""' -lnvnatweat relevant scale
CNGILNG 0.1% reduction Fuel coat MVings
Truck Transport 25,000-milelday neet High capital eo&t
_..........s_ _ .._.
31 % reduction Requires large, consistent
100 1-MMCFD Ws """""Conwrsion of gas to •

GTL a% reduction
2500-bpd production

Geographic Distribution Remote Capture Implemented
of Locations with
Flaring Rates Greater ECO-AFS has installed bifuel systems on 30 drilling rigs
than 300 MCFD to date. Gas use of up to 100 MCFD during active drilling.
Statoil is demonstrating GE's technology to recover NGLs
June 222 Locations and compress/deliver lean gas to bifuel drilling rigs.
July 270 Locations Hess, EOG, and Halcon have worked with GTUIT for NGL
August 242 Locations recovery at flared locations.
September 237 Locations Whiting is working with BX Energy to haul rich gas from
October 227 Locations flaring location to gas plant.
November 216 Locations
·~ ..
Locat ion W here Flare
Rate Wa s >300 MCFD in
Previous 5 Months

November 2013

10

1/29/2014

Technology Summary Points

Technologies exist that can be deployed to utilize flared gas ,
providing small incremental benefrt to gas utilization .
Gas flaring is a result of many factors. Each technology can
address different challenges and improve gas capture under
certain cond~ions .
Distributed-scale technology alone cannot be economically
deployed widely enough to achieve 90% gas capture .
Remote capture can contribute to the target when coupled
w~h increased gathering and improved gas capture planning .
Demonstration of technologies in North Dakota can allow
evaluation of technology in a relevant environment, ensure
desired outcome, and assess ancillary impacts (truck traffic,
safety risk) .

·~

Quest ions?

11

Gas Pipeline Information

Increase Density
Sections 16 & 21 - 152N - 99W
McKenzie County, North Dakota

-- - - - ~- - - - - - - - --~---- -- -·--- - - -~---
14 13
L I -r!~ 15 23 24
i li
16
18 ~-GatherlnaUne

Hi ~v 22
~ 21
30 1 ~ IWahpeton 2·21H
25
29 28 27 26

~1~~_,...tlf 1
~iifiiiiii'-=,_-a~ '! 11
-

I

u . ta

Gas Gatherer: Hiland

Distance from Gas Gatherer to well: 0 .25 miles

Anticipated date of 1st gas flow: First Production

Gas to be processed at: Watford City

Gathering pipeline capacity: 10,000 Mcfd

Current gathering pipeline throughput: 5,000 Mcfd