The Bakken formation has been one of the success stories so far in the American shale revolution. This part of the country has gone from a very minor player in the U.S. energy landscape to a major production center that averages 1 million barrels per day. Despite the great success there, one issue has perplexed Bakken drillers for quite some time: how to prevent gas flaring in an economical way. It appears, though, that Continental Resources may have just found the best solution. Let’s see how Continental has changed its drilling tactics to prevent flaring and how it could change the Bakken.
The birth of the mega-pad
The Bakken formation is first and foremost an oil-producing region. Wells from Continental and other Bakken drillers have so far been yielding a mix of 85% oil or greater from each well. Since these wells produce so little natural gas, it hasn’t been economical to lay pipeline to take that natural gas away from the wellhead, so most companies had been flaring off that gas. However, there are so many wells in the region now that flaring is becoming a major concern not just for the ecological impact, but also for the loss of potential revenue. In fact, gas flaring is so prevalent in the region that it can be seen from space.
In response to this, the top drillers in the space have made pledges to cut flaring. Hess has pledged to reduce it by 50%, and both Continental and Whiting Petroleum have said they are shooting for zero flaring. The most effective way to do this would be, of course, to install natural gas pipelines to each pad, but, again, the amount of gas coming from a well or two makes it a very uneconomical decision. If you could install a gathering pipe for several wells, then you have a chance at making it happen.
This is exactly what Continental plans to do.
Another reason the Bakken is a unique formation is that it is what the industry calls a stacked play, meaning there are several oil-yielding formations stacked on top of each other.