North Dakota’s oil production from its Bakken Shale formation continues to grow, reaching 660 thousand barrels per day (bbl/d) in June 2012. With a back-to-back 5 percent rise in oil output every month, North Dakota does not expect the pace of production to slow down. By all accounts, an immediate challenge for the oil boom is the inability of producers to deliver to refineries due to insufficient pipeline capacity. Rapidly growing oil production and infrastructure problems are also starting to pose serious environmental challenges.
The Bakken Shale formation has a substantial amount of associated gas, which is a raw natural gas released as a result of petroleum production. Natural gas is often found in oil wells, where it is either dissolved in crude oil or exists separately in a form of a cap above oil. Unless it can be captured and used for commercial purposes, associated gas is flared off upon reaching a well surface; it can also be directly vented into the atmosphere without burning.
The United States now ranks as one of the world’s top five flaring countries, according to the World Bank’s recent report. That is largely due to the rise in oil drilling in North Dakota. In 2011, the United States represented 5 percent of all gas flaring. Presently, most companies burn off associated gas rather than invest in pipelines and processing plants to capture and sell the gas because of added costs.
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It is estimated that nearly 30 percent of the associated gas is burned off at the wellhead because of insufficient gas-collecting mechanisms in North Dakota. Flared gas is not only environmentally harmful as a source of greenhouse gas emissions, it is also a wasted resource which could be captured and sold, used for power generation, or re-injected back into the oil field.
While current investments in gas-related infrastructure will help reduce gas flaring, it is not known whether they will keep up with the expected rise in drilling in coming years. With no regulation on gas flaring at the national level, largely due to a limited flaring problem since the 1970's, it is also becoming an issue in the Eagle Ford shale field in Texas, as well as potentially in other states endowed with unconventional oil sources, such as Ohio, Oklahoma and Arkansas. Given the size of the Bakken Shale play and expansion of shale drilling in other states, the era of the U.S. unconventional oil and gas seems to portend not only massive infrastructure changes to streamline transportation of domestic crude oil and gas, but also a more careful regulation of this relatively novel industry to prevent an environmental backlash.
By Saltanat Berdikeeva, non-resident fellow, the Regional Studies Center (Armenia) and an energy consultant based in Washington, D.C