North Dakota Seeks to Build Industry to Use Excess Natural Gas

North Dakota, which burns away almost a third of the natural gas it produces, is encouraging investments in processing plants and chemical manufacturing to put more of the fuel to work, Governor Jack Dalrymple said at the Bloomberg Energy 2020 conference.

While there are 20 gas plants in the state and more are being built at an average of one every six months, it’s not enough to keep up with flaring that comes as new wells begin production, Dalrymple said at the conference in Washington. Gas plants process raw supplies from wells to remove impurities.

Gas pumped in North Dakota is a byproduct of the production of crude other liquids at the Bakken shale deposit in North Dakota. The state ranks second to Texas in U.S. oil production. Gas output has surpassed 1 billion cubic feet a day in the state, Dalrymple said. Of that, about 300 million is flared into the atmosphere.

“We have this incredible opportunity to capture something of huge economic value that is simply not capturing any value as of today,” Dalrymple said.

Finding uses for gas will also help reduce emissions that contribute to climate change, he said. Statoil ASA (STL) has teamed up with General Electric Co. (GE) and Ferus Inc. in a pilot project to capture and compress gas that would otherwise be flared.

This so-called CNG in a box can be moved by truck to production sites where gas would otherwise be flared, to be used as fuel by rigs. Statoil has two trucks in place now, Lance Langford, vice president of North American production and development at Statoil, said at the conference.

Gas Uses

Replacing diesel in the state with natural gas would soak up about 40 percent of the 300 million cubic feet of daily gas currently being flared, said Stewart Wilson, associate of business development at Ferus. 

Natural gas has been a game changer as the surge in supplies turns it into a baseload fuel instead of being just a bridge fuel to cleaner energy, said General Electric Chief Executive Officer Jeffrey Immelt.

“There’s tremendous investment in networks” to get gas from producing regions to the populations and industries that rely on the fuel, Immelt said. The shift toward gas isn’t just a U.S. trend, he said. Sales of gas-fired turbines to emerging markets such as Nigeria will be three times higher than to buyers in the U.S. over the next three years, Immelt said. 

Dalrymple said pipelines are “the most cost effective way” to deliver oil to market when also factoring in safety issues. He said there are plans to build a 100,000 barrel-a-day feeder line to Montana to connect oil in the state to the proposed Keystone XL oil pipeline. 

“Energy is a big topic with all governors right now,” said Dalrymple, who was among governors expected to meet with President Barack Obama at the White House today to discuss energy development strategies.

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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