By Velda Addison, Hart Energy

North Dakota has an opportunity to turn a negative into a positive, but the task will be challenging.

The oil and gas industry in North Dakota has been wasteful by flaring natural gas instead of selling it or consuming it on site. A report released this week by the U.S. Energy Information Administration (EIA) stated that about one-third of the natural gas produced in the state in recent years has been flared.

That’s quite a lot of associated gas being flared, considering oil production has ballooned from more than 230,000 bbl/d in January 2010 to more than 1.1 MMbbl/d in August 2014.

Realizing what is at stake North Dakota’s Industrial Commission (NDIC) has made reducing the number of wells flaring, reducing the duration of flaring from wells and reducing the overall flared volume its goals—even at the risk of lowering oil production in the second-largest oil-producing state in the U.S.

“The first target of 26% flared is set for fourth-quarter 2014, with continued decreases in flaring reaching 10% by 2020,” the EIA said. “North Dakota recently reported that it was close to achieving the 26% reduction target for natural gas flaring, as the percentage in August was 28% flared, or 375 million cubic feet per day [10.6 MMcm/d] out of a total production of 1,340 MMcf/d [38 MMcm/d]. The rest of the produced natural gas was either sold or used at the production site.”

The NDIC is requiring gas capture plans as well as semiannual meetings with companies to access the effectiveness of such plans and their impact on production, contracts and service among other items, according to an NDIC presentation posted on the Department of Mineral Resources website.

Part of the problem behind the large amount of flared gas is a lack of gathering pipelines and other infrastructure shortcomings.

“Infrastructure buildouts can cause delays in realizing the value of crude oil and other liquids that motivate drilling in North Dakota and are uneconomic when natural gas volumes there are too low,” the EIA said in the report. “The largest challenge, according to the NDIC, is securing landowner permission for connection activities, which can delay projects half a year or longer. Other obstacles include zoning and permitting delays, harsh weather and labor shortages.”

Here is where everyone—not just the upstream sector—can step in to improve the situation.

E&P companies can look for ways to tighten spending elsewhere or bring in additional revenue from other parts of their operations. Midstream companies can also step up investment plans to bring in needed infrastructure online. Landowners and regulatory bodies can hasten decision-making on their parts and stay informed on issues. And everyone should keep the doors of communication open as well as listen to and address the concerns of other stakeholders.

The good news is that companies appear to be stepping up to the challenge.

ONEOK Inc. plans to add another 400 MMcf/d (11.3 MMcm/d) of natural gas processing capacity by year-end 2016, the EIA said, later adding,“By the end of the year, expected completions of natural gas processing plant projects would increase North Dakota’s natural gas processing capacity to 1,454 MMcf/d [41 MMcm/d], or 440 MMcf/d more than last year.”

Reuters reported that although production reached a record high, some energy companies held back to connect wells to equipment that could process gas. The news agency reported that oil producers in the state face fines if they flare more than 74% of gas produced.

“I know oil producers are incredibly focused on gas capture and spending a lot of money to get there, but not all producers will get there right away,” Lynn Helms, director of North Dakota’s Department of Mineral Resources, said in the article.

Once needed infrastructure is in place, then the industry can step up production again and work with regulators to get gas to places where it is needed the most.

Contact the author, Velda Addison, at