Student Post: Natural Gas Pipelines in North Dakota

According to the ND Department of Mineral Resources, North Dakota is currently producing so much natural gas that it does not have the pipeline infrastructure to transport it to market. The numbers are truly staggering. North Dakota, as of November 2011, produced 521 million cubic feet per day. This is presumably enough to heat 521,000 homes (I assume for a day, although I find this statistic somewhat dubious because of the considerable amount of variables that go into calculating the amount of natural gas that it takes to heat a home.) In the early 2000’s, North Dakota was producing approximately 150 million cubic feet per day. In early 2010, North Dakota set a record at 280 million cubic feet per day. This number is likely to rise as drilling activity continues in western North Dakota. In November 2011, that number hit 521 million cubic feet.

With all the attention on oil reserves, probably because the price of oil makes it so profitable, natural gas doesn’t seem to get much attention. Thus, its pipeline projects don’t get as much attention. Think about the outrage of the Obama administration’s denial of the Keystone XL project. But oil is not being flared off and essentially wasted. It finds its way to market. Natural gas is being flared off.

In my opinion, the lack of focus on natural gas is a significant strategic problem for North Dakota. According to a forthcoming study North Dakota Department of Mineral Resources, when harvesting natural gas and oil from the Bakken formation, natural gas output falls less rapidly than oil output. In other words, natural gas is going to be around much longer than oil. There is also some evidence that demand for natural gas may go up in the not so distant future. If North Dakota has the infrastructure to meet that demand, North Dakota can capitalize on a natural gas price rise in the same way it has capitalized on high oil prices. If it does not, it will face the same pressures that it has faced with the oil boom.

Luckily, some people have seen the use in increasing our natural gas infrastructure. North Dakota’s natural gas transportation capacity doubled last year, and may double again this year. But even doubling capacity still won’t keep up with production. It will be interesting to see, as the year goes on, whether natural gas becomes a larger focus, or if we continue to focus on oil.