Should Oil Companies Receive Incentive to Reduce Flaring? - KXNet - Bismarck/Minot/Williston/Dickinson

Should oil companies be given an incentive to reduce flaring -- or should it just be expected?

Donnell Preskey has more on a bill aimed at reducing the amount of natural gas being wasted.

The flames that light up western North Dakota at night are not seen as a good thing.

30% of North Dakota's natural gas production is being flared, or wasted.

That amount of gas burned off each day could heat 25,000 homes for a month.

Director of Mineral Resources, Lynn Helms, says gas plants currently have room for more natural gas, but there's a hold up in getting the easements necessary to build pipelines.

12:00:00 we could tackle this with 1980's tools, with production restrictions. What would that do? It would reduce the cash flow from the Bakken five-fold and the long term profitability of that well by over 25%.

Helms says restricting production could destroy the economic engine oil development has created.

Instead, he says, there are non-traditional ways to process natural gas.

He's asking legislators to give a tax exemption to those who can capture 75% of the natural gas and process it for alternative uses.

"The unit captures the gas and turns it into anhydrous ammonia, diesel fuel, power drilling rig"

Helms says there could be 400 mobile units at various well sites.

The tax exemption could mean the difference between it being economical or not.

But Helms says the greatest benefit to the alternative processing units is reducing the amount of gas being wasted.

"Reduce the flaring problem by 1/3. At 250 million cubic feet per day, if turn 80 million of that into a product, that's equivalent to what's processed at a plant in one day."

Helms stresses this is a temporary solution.

The tax exemption would only be for 2 years.

The ultimate goal is to get 95% of the well sites connected to pipelines and feeding to gas plants.

There are two exemptions included in the bill.

One would be a tax exemption for oil producers on the gas collected at the well site, the other exemption is a sales tax exemption for the companies making the mobile processing units.