The Energy Policy Research Foundation, Inc. (EPRINC) Releases Report on Natural Gas Flaring in North Dakota.

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New report from the Energy Policy Research Foundation, Inc. (EPRINC) shows prohibition on natural gas flaring would be costly and harm U.S. domestic crude oil production.

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...natural gas processing plant capacity in North Dakota is keeping up with natural gas production, but there still remains a lag in flaring which indicates that there are infrastructure delays in the building of gathering lines to individual wells

The Energy Policy Research Foundation, Inc. (EPRINC) in Washington, D.C. has released a report on the recent growth in flaring of natural gas in the United States. The full report, “Lighting up the Prairie, Economic Considerations in Natural Gas Flaring” can be found here [ __title__ Lighting Up the Prairie, Economic Considerations in Natural Gas Flaring].

In July 2012 the World Bank published new satellite data showing the U.S. provided the single largest addition to world natural gas flaring in 2011. Flaring is the combustion of produced natural gas that often occurs in the early stages of oil and gas development before adequate natural gas pipelines and processing infrastructure are available to take the gas to market. A significant amount of the increase in U.S. flaring has been concentrated in North Dakota, which is now the second largest oil producing state after Texas. As North Dakota expands oil production, substantial volumes of associated natural are being produced and flared.

The EPRINC report concluded the following:

1.    A prohibition on flaring would preserve currently burned natural gas and NGLs for future sale into the U.S. pipeline and product network. However, the financial penalties associated with delaying oil production outweigh the benefits of the gas savings for two reasons: 1) Crude oil is more valuable than gas, and 2) The economic penalty from delayed oil production exceeds the net gain of any savings in future production of natural gas. If a prohibition on natural gas flaring delayed oil production by just three years or five years, the economic loss would be $36 billion and $50 billion, respectively, for North Dakota alone.

2.    Deploying the infrastructure to capture and sell produced natural gas may actually yield a short-term increase in flaring as new high productive wells come online. Existing wells connected to gathering systems already selling gas may need to temporarily flare again as newer wells with higher production volumes come online.

3.    Flaring will likely decline in the near future as the infrastructure to capture associated gas production catches up with expanded oil production.
When the author of the report, Trisha Curtis, a senior research analyst at EPRINC, was asked about initiatives to prohibit flaring, she said:

“Without the necessary infrastructure, you cannot safely produce the oil unless you are allowed to flare the associated gas. In addition, $4 billion of infrastructure investment is taking place for natural gas processing equipment and should contribute to continual declines in natural gas flaring in North Dakota. Policy prohibitions on flaring would slow down development of oil production, which is of enormous economic and energy security value to North Dakota and the United States. No one wants to waste this natural gas and we should implement prudent policy strategies which promote gas capturing infrastructure development as well as short term solutions to capture this gas.”

Contact: Trisha Curtis
Tel: 202 944 3339

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