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Dale Wetzel, Associated Press, Published November 20 2010

North Dakota to up natural gas processing

BISMARCK – A new $175 million natural gas processing plant will help reduce the amount of gas that is burned off and wasted because of North Dakota’s rapidly rising oil production, state regulators said Friday.

North Dakota’s Public Service Commission approved construction of the plant, which will be built about 4½ miles northeast of Watford City in McKenzie County. It will collect gas from about 300 wells in eastern McKenzie County and southwestern Mountrail County in northwestern North Dakota.

The plant’s developer, Bear Paw Energy LLC, a unit of Oneok Partners LP of Tulsa, Okla., expects to begin construction soon and finish by early 2012, said Kevin Cramer, the commission’s chairman.

Once it is in operation, the plant will be able to handle about 100 million cubic feet of gas daily. Natural gas processing extracts liquids, including butane and propane, that can be sold separately.

William Delmore, an attorney for Bear Paw, said the company may apply next year to build another plant of similar size.

Most of North Dakota’s natural gas output is a byproduct of oil production, which has been rising steeply. From January until September alone, oil production has risen 45 percent, to an average of 341,385 barrels daily, according to the state Department of Mineral Resources.

Natural gas production has jumped 30 percent during the same period, to an average of 10.2 million thousand cubic feet per month.

The agency estimated in September that about 16 percent of the state’s natural gas production is being flared, which both wastes energy and increases greenhouse gas emissions. The U.S. Energy Department’s Energy Information Administration says that nationwide, less than 1 percent of the nation’s natural gas production is flared.

“While it’s sometimes frustrating to see the flares out there, at the same time I think that we are seeing significant investment in both the capturing and the processing of that gas,” Cramer said.

Cramer and Commissioner Tony Clark said increases in North Dakota’s natural gas processing capacity will make the fuel more plentiful, but they said the effect on prices is less certain. Natural gas is a widely used home heating fuel.

“In some incremental way, it helps,” Clark said.

Bear Paw already operates four natural gas processing plants in North Dakota, which are capable of processing about 125,000 cubic feet of gas daily, Public Service Commission filings show. It owns about 3,700 miles of natural gas gathering pipelines in the state.

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