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I think the raw numbers speak for themselves. The amount of gas being flared in North Dakota is about 150 million cubic feet per day [0], worth (at $3.95/thous

by uvdiv 14y ago

I think the raw numbers speak for themselves. The amount of gas being flared in North Dakota is about 150 million cubic feet per day [0], worth (at $3.95/thousand cubic feet, at the wellhead [1]) $220 million per year. The amount of oil being sold is 728,000 barrels per day [2], at $95/barrel, worth $25.3 billion (B) per year. For the oil producers, this flaring is a financial rounding error (<1%). I think it's credible that $200M/year of gas, distributed over hundreds of oil wells, can be unprofitable to recover. In various metrics: the natural gas flared / oil produced is * 0.9% of the value ($$$) * 3.7% of the raw energy (Joules) * 2.6% of the raw carbon (-> CO2) [0] http://www.nytimes.com/2011/09/27/business/energy-environment/in-north-dakota-wasted-natural-gas-flickers-against-the-sky.html?pagewanted=all http://www.nytimes.com/2011/09/27/business/energy-environmen... [1] http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_a.htm http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_a.htm [2] http://online.wsj.com/article/SB10001424127887324296604578177432510742360.html http://online.wsj.com/article/SB1000142412788732429660457817...

notatoad 14y ago
This is a perfect opportunity for government regulation. Tax the waste so that it becomes something more than a rounding error. Government gets a source of revenue, get the environmental benefits of increased natural gas use, and it's not like the oil companies are going to pack up and leave because of a tax, because the oil isn't going to leave with them.
- uvdiv 14y ago
  Tax the waste so that it becomes something more than a rounding error. So what exactly, an arbitrary 1,000% tax just to make it expensive, because of a subjective emotional reaction that says this particular 3% ineffeciency is pure evil, where 3% ineffeciencies elsewhere are natural and understandable engineering compromises? The incentives are absolutely correct in my view. The "waste" here is apparently less expensive than the alternative (low-value gas pipelines). Maybe some peoples' guts say gas flares are an "evil" type of waste, whereas the human labor spent installing thousands of miles of unproductive pipelines is a "good" waste. I hope those peoples' guts aren't put in decision-making positions.
  - dasil003 14y ago
    It's not entirely subjective. I think the underlying reasoning is that regardless of current prices, gas and oil are non-renewable resources that should not be wasted.
    - maxerickson 14y ago
      The energy content of methane is a lot more interesting than the methane itself. It is easy enough to harvest from biological processes and if you really need it, it can easily be synthesized: http://en.wikipedia.org/wiki/Sabatier_process http://en.wikipedia.org/wiki/Sabatier_process
    - sageikosa 14y ago
      That may not be entirely true: using hydrolitic disproportionate of super-critical water and heated crushed coal slurry, dropped 10000 feet down in a closed continuous feed chamber, the coal slurry will break into shorter segments and reform as hydrocarbons using the hydrogen from the super-critical water. The same process may also be applicable to bio-mass, such as plant material. http://www.hcssllc.com/index.html http://www.hcssllc.com/index.html
  - ricardobeat 14y ago
    Your reasoning would be fine if gas was infinitely available, but it's value will only go up over time.
  - urbanautomaton 14y ago
    The incentives are completely screwed, because flaring off that gas represents a mere opportunity cost to the oil company, yet imposes a heavy externality on the rest of the world. The waste is only "less expensive than the alternative" because the person doing the wasting isn't the one paying the price. So yes, absolutely: impose a carbon tax, where the person burning any fossil fuel pays a price that actually reflects the externalities of their choice. That's not arbitrary at all. If it still makes financial sense to flare rather than capture, fine. But there's no pretending that everything is all right with the existing equation.
- sliverstorm 14y ago
  First, the G.P. discusses the issue that the infrastructure just isn't there yet. Second, from the article: For a year (with extensions), North Dakota allows drillers to burn gas, just let it flare. They put a cap on it.
- PoliticsJunkie 14y ago
  And you will be happy to pay that tax at the gas pump, right?
- mhb 14y ago
  Punitive tax -> higher oil price -> shipping oil from overseas is more competitive -> more fuel used and environmental impact to get the oil from overseas You should probably just be advocating a carbon tax since that addresses this externality in a more general way.
  - drkevorkian 14y ago
    A carbon tax makes sense, but probably wouldn't impact this behavior explicitly, since the natural gas is being burned before it even reaches the market.
    - eru 14y ago
      A carbon tax can apply here as well. In fact, it's probably best to make producers pay carbon tax where possible, since they will be simpler to tax (and the tax will be harder to evade for them).
lloeki 14y ago
> 2.6% of the raw carbon (-> CO2) It seems barely anybody is concerned by this. Sure if it's 2.6%, 97.4% will be released in some form at some point, but those 2.6% are lost with a utility/greenhouse ratio of effectively zero. That's 150 million cubic feet per day flared into heat+CO2 for naught. I don't know how this stacks up against other means of getting oil. FWIW, France could economically benefit from fracking, but it has been decided at the political level to ban the practice until it can be made provably safe and sound.
- uvdiv 14y ago
  Sure if it's 2.6%, 97.4% will be released in some form at some point, but those 2.6% are lost with a utility/greenhouse ratio of effectively zero. But the marginal utility of capturing that gas is negative: less than zero. (By the way it's 4.2%, not 2.6%; my post has an error and I can't edit it. There's a mismatch between the gas flaring and oil production figures: one is from 2011 (NYT article), the other 2012 (WSJ). It's a large error because oil production doubled in the space of a few months).
- ekianjo 14y ago
  So what? Since when is French Politics any indicative of good decisions? France has the tradition for like 20-30 years now to ban stuff out of "precautionary principle", meaning that they do not even consider the possibility of doing anything if there is any single risk involved, instead of thinking of how to manage the risks.
JumpCrisscross 14y ago
The problem is less capturing the gas profitably as it is shipping it. Natural gas can be transported in pipes or multi-modally as liquefied natural gas (LNG). LNG liquefaction/gasification terminals, however, are , politically volatile multi-billion dollar, multi-year [1] fixed investments. Localisation is an un-solved problem - natural gas trades at 3.48 USD/MMBtu in the U.S [2]. Japan is importing LNG at 16.49 USD/MMBtu [3] - that's nearly five times the American price. North Dakota presently lacks the pipeline capacity to export even its crude - lorries are commissioned to truck the stuff to refineries. As mentioned, you can't truck gas. So it's a choice between (a) releasing it into the atmosphere directly, (b) flaring it into the atmosphere, or, (c) delaying American crude production until a natural gas pipeline can be constructed. B is less environmentally harmful than A. C is economically a bad decision (time value of money/resources). [1] http://www.freeportlng.com/Liquefaction_FAQs.asp#howlong http://www.freeportlng.com/Liquefaction_FAQs.asp#howlong [2] http://www.bloomberg.com/energy/ http://www.bloomberg.com/energy/ [3] http://ycharts.com/indicators/japan_liquefied_natural_gas_import_price http://ycharts.com/indicators/japan_liquefied_natural_gas_im...
- netc 14y ago
  Genuine question - Can't a natural gas power plant be built nearby? Assuming access to grid is not far, extra power can be sold to nearby markets.
  - sawdisk 14y ago
    The issue with that, is that here in North Dakota, we don't have the infrastructure in place to take that electricity out of state. We already have a coal plant along with a hydroelectric plant that produce more than the state needs (along with some wind towers in several places).
    - justincormack 14y ago
      Closing the coal plant and building a gas plant is probably the best solution. The price of LNG liquefaction plants is huge and you want them on the sea so you need pipelines too.
brianstorms 14y ago
How many millions of gallons of water is North Dakota using now, for all this fracking? And where is the water coming from?

by uvdiv 14y ago

notatoad 14y ago

This is a perfect opportunity for government regulation. Tax the waste so that it becomes something more than a rounding error. Government gets a source of revenue, get the environmental benefits of increased natural gas use, and it's not like the oil companies are going to pack up and leave because of a tax, because the oil isn't going to leave with them.

uvdiv 14y ago
Tax the waste so that it becomes something more than a rounding error. So what exactly, an arbitrary 1,000% tax just to make it expensive, because of a subjective emotional reaction that says this particular 3% ineffeciency is pure evil, where 3% ineffeciencies elsewhere are natural and understandable engineering compromises? The incentives are absolutely correct in my view. The "waste" here is apparently less expensive than the alternative (low-value gas pipelines). Maybe some peoples' guts say gas flares are an "evil" type of waste, whereas the human labor spent installing thousands of miles of unproductive pipelines is a "good" waste. I hope those peoples' guts aren't put in decision-making positions.
- dasil003 14y ago
  It's not entirely subjective. I think the underlying reasoning is that regardless of current prices, gas and oil are non-renewable resources that should not be wasted.
  - maxerickson 14y ago
    The energy content of methane is a lot more interesting than the methane itself. It is easy enough to harvest from biological processes and if you really need it, it can easily be synthesized: http://en.wikipedia.org/wiki/Sabatier_process http://en.wikipedia.org/wiki/Sabatier_process
  - sageikosa 14y ago
    That may not be entirely true: using hydrolitic disproportionate of super-critical water and heated crushed coal slurry, dropped 10000 feet down in a closed continuous feed chamber, the coal slurry will break into shorter segments and reform as hydrocarbons using the hydrogen from the super-critical water. The same process may also be applicable to bio-mass, such as plant material. http://www.hcssllc.com/index.html http://www.hcssllc.com/index.html
- ricardobeat 14y ago
  Your reasoning would be fine if gas was infinitely available, but it's value will only go up over time.
- urbanautomaton 14y ago
  The incentives are completely screwed, because flaring off that gas represents a mere opportunity cost to the oil company, yet imposes a heavy externality on the rest of the world. The waste is only "less expensive than the alternative" because the person doing the wasting isn't the one paying the price. So yes, absolutely: impose a carbon tax, where the person burning any fossil fuel pays a price that actually reflects the externalities of their choice. That's not arbitrary at all. If it still makes financial sense to flare rather than capture, fine. But there's no pretending that everything is all right with the existing equation.
sliverstorm 14y ago
First, the G.P. discusses the issue that the infrastructure just isn't there yet. Second, from the article: For a year (with extensions), North Dakota allows drillers to burn gas, just let it flare. They put a cap on it.
PoliticsJunkie 14y ago
And you will be happy to pay that tax at the gas pump, right?
mhb 14y ago
Punitive tax -> higher oil price -> shipping oil from overseas is more competitive -> more fuel used and environmental impact to get the oil from overseas You should probably just be advocating a carbon tax since that addresses this externality in a more general way.
- drkevorkian 14y ago
  A carbon tax makes sense, but probably wouldn't impact this behavior explicitly, since the natural gas is being burned before it even reaches the market.
  - eru 14y ago
    A carbon tax can apply here as well. In fact, it's probably best to make producers pay carbon tax where possible, since they will be simpler to tax (and the tax will be harder to evade for them).

lloeki 14y ago

> 2.6% of the raw carbon (-> CO2) It seems barely anybody is concerned by this. Sure if it's 2.6%, 97.4% will be released in some form at some point, but those 2.6% are lost with a utility/greenhouse ratio of effectively zero. That's 150 million cubic feet per day flared into heat+CO2 for naught. I don't know how this stacks up against other means of getting oil. FWIW, France could economically benefit from fracking, but it has been decided at the political level to ban the practice until it can be made provably safe and sound.

uvdiv 14y ago
Sure if it's 2.6%, 97.4% will be released in some form at some point, but those 2.6% are lost with a utility/greenhouse ratio of effectively zero. But the marginal utility of capturing that gas is negative: less than zero. (By the way it's 4.2%, not 2.6%; my post has an error and I can't edit it. There's a mismatch between the gas flaring and oil production figures: one is from 2011 (NYT article), the other 2012 (WSJ). It's a large error because oil production doubled in the space of a few months).
ekianjo 14y ago
So what? Since when is French Politics any indicative of good decisions? France has the tradition for like 20-30 years now to ban stuff out of "precautionary principle", meaning that they do not even consider the possibility of doing anything if there is any single risk involved, instead of thinking of how to manage the risks.

JumpCrisscross 14y ago

The problem is less capturing the gas profitably as it is shipping it. Natural gas can be transported in pipes or multi-modally as liquefied natural gas (LNG). LNG liquefaction/gasification terminals, however, are , politically volatile multi-billion dollar, multi-year [1] fixed investments. Localisation is an un-solved problem - natural gas trades at 3.48 USD/MMBtu in the U.S [2]. Japan is importing LNG at 16.49 USD/MMBtu [3] - that's nearly five times the American price. North Dakota presently lacks the pipeline capacity to export even its crude - lorries are commissioned to truck the stuff to refineries. As mentioned, you can't truck gas. So it's a choice between (a) releasing it into the atmosphere directly, (b) flaring it into the atmosphere, or, (c) delaying American crude production until a natural gas pipeline can be constructed. B is less environmentally harmful than A. C is economically a bad decision (time value of money/resources). [1] http://www.freeportlng.com/Liquefaction_FAQs.asp#howlong http://www.freeportlng.com/Liquefaction_FAQs.asp#howlong [2] http://www.bloomberg.com/energy/ http://www.bloomberg.com/energy/ [3] http://ycharts.com/indicators/japan_liquefied_natural_gas_import_price http://ycharts.com/indicators/japan_liquefied_natural_gas_im...

netc 14y ago
Genuine question - Can't a natural gas power plant be built nearby? Assuming access to grid is not far, extra power can be sold to nearby markets.
- sawdisk 14y ago
  The issue with that, is that here in North Dakota, we don't have the infrastructure in place to take that electricity out of state. We already have a coal plant along with a hydroelectric plant that produce more than the state needs (along with some wind towers in several places).
  - justincormack 14y ago
    Closing the coal plant and building a gas plant is probably the best solution. The price of LNG liquefaction plants is huge and you want them on the sea so you need pipelines too.

brianstorms 14y ago

How many millions of gallons of water is North Dakota using now, for all this fracking? And where is the water coming from?