The Wall Street Journal earlier this week
reported on a dispute between land and mineral-rights owners and one of the
biggest oil producers in North Dakota regarding the value of natural gas burned
off in gas flaring.
According to the WSJ article, Continental
Resources Ltd. wants to pay state taxes and royalties on the natural gas that
it was allegedly forced to burn-off rather than sell for profit due to the
state’s inadequate supply of pipelines, which would ideally carry the gas away
along with the flow of oil. As it stands, North Dakota regulators allow oil
producers to flare gas for the first year a well is producing, but unless the
well is connected to a natural gas pipeline, must stop after 12 months. The
intention of this regulation is that companies would only flare gas that state
pipelines couldn’t accommodate.
Now, Continental is seeking support from
state regulators to approve payment plans on dozens of wells in recent years.
Sounds fair enough, but the hitch is in determining just how much that natural
gas is worth and what the amount of the payments, if allowed, should be.
Last November, Continental estimated its
potential liability to range between $136 million and $218 million, though the
company now says the final amount will likely be smaller. As reported by the
WSJ, Continental says it has paid royalties to more than 16,000 in the last six
year.
Lawyers representing some of the land and
mineral-rights owners who have filed suit against Continental argue that the
company’s main priority is not a good forth effort, but a move to minimize its
liability amid state efforts to curb flaring.
“It’s a huge amount of money that is being
burned off every month and a percentage of that is owed to the royalty owners,”
Cody Balzer, a lawyer representing North Dakotans who say they should have been
paid royalties for gas that was produced but burned rather than sold, told WSJ.
“Collectively, it’s millions of dollars a day.”
One strong factor of this situation is
obviously money. But the discrepancy between the two parties also reflects a
nationwide struggle for lawmakers in top oil producing states explore measures
to minimize gas flaring and its hazardous effects on the environment, wildlife
and quality of life surrounding the wells. And in several states, the problem
lies in the fact that natural gas production has outpaced extensions to the
state’s gas pipeline capacity and processing facilities.
Aptly headquartered in the energy-anchored
metropolis of Houston, Texas, Well Power, Inc. is developing a solution. Well
Power has secured the licensing rights to Texas, along with the first right of
refusal on the other U.S. states, to a new technology solution to process waste
natural gas into “clean power” and engineered fuels.
The company’s Well Power’s Micro Refinery
Unit (MRU) offers the opportunity to create value from a wasted resource while
simultaneously enabling wider access to energy, improved environmental
conditions, and economic development for local populations. Based on
proprietary technology, this solution is mobile, high-yield and can be deployed
with minimum capital expenditure.
Well Power’s plan is to provide its
technology in conjunction with full-service engineering, design, construction,
modular fabrication, maintenance and construction management services to
clients in the upstream areas of exploration and production. The company will
also offer consulting services, process assessments, facility appraisals,
feasibility studies, technology evaluations, project finance structuring and
support, and multi-client subscription services.
The company plans to deploy its first test
unit later this year, and speaking for the broader oil and gas industry, the
solution couldn’t come fast enough.
For more information about Well Power visit
www.wellpowerinc.com
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