As new regulations begin to take effect, oil producers are finding creative solutions to the the flaring problem.
The industry isn’t in denial when it comes to the flaring, says Lance Langford, vice president of the Bakken Asset for Statoil.
“I think we all know we need to reduce flaring. We want to reduce flaring,” he said. “It’s not just the environmental footprint we have here. There’s also value capture for us, for the mineral rights holders and the state. I think it’s fair, but it’s going to be a challenge.”
Langford would know. His Norwegian-based company has been one of the biggest players in the Bakken region, since it purchased Brigham Exploration for $4.4 billion in 2011. With roughly 300,000 net acres, Statoil is making a concerted push to expand its presence in the region. It’s also working to cut its flaring.
Statoil last year announced a joint partnership with General Electric and Ferus Natural Gas Fuels, a Canadian natural gas logistics company. The companies have been piloting GE’s “CNG in a Box” technology at a Statoil rig just east Watford City, North Dakota. The unit compresses natural gas and stores it for the final distance of the fuel process. This option is referred to as the “Last Mile” fueling solution.
The unit doesn’t look like much—a brown box about the size of a small shed, with pipes running out of it. But the unit holds enough CNG to help power operations for a Statoil rig drilling 11 new wells. By this time next year, Statoil hopes all six of its rigs are partially running on natural gas captured from its wells.
“It’s a win on multiple levels,” Langford said. “At the site we’re reducing flaring, we’re also capturing value, and we’re lowering our fuel costs.”
General Electric and Ferus hope to take the service even further. GE project manager Phil Fusacchia and his team are in talks with all the major drillers in the basin about using the CNG in a box technology.
“We have a backlog of about four times the scale of what we’ve done with Statoil,” he said. “Right now we’re even starting to move into Texas.”
And while the pilot program has shown drillers can use the technology to lower their flare rates and fuel costs, Statoil and GE are thinking bigger. They hope to create a market for the compressed natural gas, which could fuel everything from commercial drilling fleets to ordinary vehicles. But for CNG to be economically viable, there needs to be a significant investment in infrastructure, Langford said.
“We need the state, federal and local governments to help encourage the use of CNG,” he said. “And we also need the private sector to come up with ways to use CNG. It’s cheaper, it’s cleaner and there are lots of opportunities.”