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North Dakota operators flare record 671 MMcf/d of natural gas in July

Highlights

Volume flared climbs to 671 MMcf/d

Flaring exceeds amount state law allows

Denver — North Dakota's natural gas production hit another record high this summer, but operators still need to get a handle on flaring as producers burned nearly twice as much gas as they are allowed under the state's gas-capture rules.

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Associated gas production reached 2.94 Bcf/d in July, a 2.2% month-on-month increase, according to data the North Dakota Industrial Commission released Monday. It was the second straight month to reach a record high.

The record associated gas production, which occurred as oil also struck a new high of 1.425 million b/d, also led to 23%, or 671 MMcf/d, of Bakken gas flared, also a record-high monthly volume.

Although the month-on-month percentage of gas flared dropped by one percentage point, the volume increased because of stronger production. The flaring percentages reached during June and July are the highest since 2014. Both are also well above current state rules requiring operators to capture 88% of associated gas production.

Due to a lack of gathering pipelines and processing facilities to handle associated gas, the only other option for drillers to limit flaring is reduce oil production. Location also plays a role in how much gas is flared. Operators flared 32% of all gas produced In the Fort Berthold Indian Reservation. NDIC Director Lynn Helms said this is because of the difficult and lengthy process to approve gathering lines on federal and Indian lands.

Even though growth in the number of well completions has slowed in the Bakken in recent months, production keeps reaching new highs. This is, in part, because of the majority of wells peaking at different times depending on the basin and the geology. For instance, in the Permian Delaware, 14.2% of all wells drilled and completed reach peak associated gas production in the first month, according to S&P Global Platts Analytics. But in the Bakken, only 4.4% reach peak gas production in the first month. Instead, production peaks for 29.4% of wells during the second month and 21.6% during the third month, the most of any major US onshore shale play during the third month.

Oil production peaks even later in the Bakken. Only 44% of wells in the Bakken reach peak oil production in the first two months as 56% of wells peak three months or more following completion.

Despite the flaring situation, producers show no inclinations to reel in drilling plans. There are currently 62 active rigs deployed across the Bakken, up from 57 in July. Continental Resources, ExxonMobil and Hess have the most rigs deployed.

So far this year, operators have brought 981 new wells online, according to Platts Analytics. This represents a 14% increase compared with this time a year ago.

-- Brandon Evans, bevans@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com