Bakken Oil Explorers Told to Cut Flaring or Face Crude Caps

Jul 01, 2014 4:27 pm ET

(Updates with state’s rank among oil producers in first paragraph.)

July 1 (Bloomberg) -- North Dakota, the second-largest U.S. oil-producing state amid booming output from shale, plans to punish crude explorers that fail to curtail the burning of natural gas as waste.

Energy companies that don’t curb so-called gas flaring will face limits on the amount of oil they can pump from the Bakken shale formation, the North Dakota Industrial Commission said in a statement today.

North Dakota is cracking down on flaring that increases air pollution and also casts a glow in the night sky that can be seen miles away from remote well sites. Oil companies routinely burn off gas that emerges along with crude from wells when local pipelines or demand are insufficient to absorb the fuel.

North Dakota’s daily crude output surpassed 1 million barrels in April for the first time in history, making the state a bigger oil supplier than OPEC members Ecuador or Qatar. In the U.S., Texas is the only state that pumps more crude than North Dakota, according to the Energy Department.

The industrial commission wants a 26 percent reduction in gas flaring statewide by the fourth quarter of this year and another 23 percent by the first quarter of 2015, according to the statement. The commission is comprised of Governor Jack Dalrymple, Attorney General Stenehjem Wayne and Agriculture Commissioner Doug Goehring.