Fracking and flaring

fracking-flaring

The tremendous growth of unconventional oil production in North Dakota has led to a rapid rise in the production of associated natural gas. However, state authorities report that a large percentage of this gas does not ultimately go to market. Nearly 30% of North Dakota gas is currently being burned off, or flared, each month as a byproduct of oil production.

The full collection and marketing of North Dakota natural gas faces two primary challenges. Firstly, natural gas has a much lower value than oil (the ratio in 2013 is reported as 30:1). This acts as a deterrent for developers to invest in natural gas. Secondly, natural gas requires its own infrastructure to be collected and marketed, necessitating further investment. In the absence of a strong regulatory framework that prohibits flaring, companies working with a limited amount of capital (no company would claim to do otherwise) have a strong incentive to focus investment on oil production with its higher returns relative to gas.

Print Friendly, PDF & Email

Tags: ,