The State of North Dakota has revised its financial incentives for capturing natural gas as a part of further reducing gas flaring. SB 2089 passed the House in late April and was signed by Governor Burgum on April 29th, 2023.
Previous incentives to reduce flaring involved a tax credit mechanism to be funded with appropriations of $3.5 million. However, the program was not widely adopted due in part to its complexity and only 10% of the appropriated dollars were approved and paid to operators.
The North Dakota Department of Mineral Resources (DMR) estimates the gas “capture” rate, or the percentage of produced gas recovered for use or sale, is currently 95%. Gas is produced along with crude oil although oil is the principal product for operators in the State.
The new program, effective for a two-year period starting this July, appropriates $3.0 million for direct grants to encourage operator investments in technologies that reduce emissions and flaring, specifically to incentivize recovery of at least 50% of the propane and heavier hydrocarbons for “beneficial use”.
Technologies eligible for the grants include capture of tank vapor, gas injection into producing wells, compression for artificial lift, and generation of on-site electricity, among others. The State would benefit from the generation of additional production tax revenue from wells that are no longer required to be shut-in due to pipeline outages or issues with infrastructure.
DMR supported the legislation and commented that newer technologies for tank vapor recovery and gas injection were available and that a cost-sharing approach would benefit the environment, operators, and the State.
Dr. Lynn Helms, Director of DMR, commented during consideration of the legislation that there were 2,700 central tank batteries in North Dakota and that many of these needed financial incentives for further flare mitigation. The need for incentives, according to Dr. Helms, is that approximately one-third of the State’s operating wells produce less than 65 bopd, making further company investment less likely.
Expectations are that flaring reductions could increase gas capture statewide by at least 1% to 96%, providing 1.8 bcf of natural gas annually in addition to the incremental oil production.
According to the U.S. Energy Information Administration, North Dakota vented or flared 76 billion cubic feet of natural gas in 2021, the second highest state after Texas. We congratulate North Dakota for recognizing the need to take proactive steps to address gas flaring!
About EcoVapor
EcoVapor, a DNOW company, provides gas treating solutions to both geologic and biogas production problems. Our fleet of proprietary ZerO2 oxygen removal (deoxo) units has grown to a fleet of nearly 300 since 2010, operating reliably for leading producers in all major U.S. basins. ZerO2 technology helps Oil & Gas and biogas producers convert waste gas streams into revenue by treating gas to meet pipeline specifications so it can be sold instead of vented or flared, generating incremental value while reducing emissions and improving environmental performance.
EcoVapor is headquartered in Denver, Colorado and has field locations in Greeley, Colorado and Midland, Texas.
Contact
EcoVapor Recovery Systems (a DNOW Company)
Email: ecovapor.info@dnow.com
Phone: 844-NOFLARE (844-663-5273)
Sales: Joe Hedges (281-615-2072)