A Tale of Two Maps: Natural gas production in Montana and South Dakota -- plus some thoughts on fracking

Maybe it was watching the recent “Dark Knight Rises,” but somehow I have lately ended up with Charles Dickens's “A Tale of Two Cities” on the brain. It has even spilled over into my musings on energy production in Montana, as the title of this post indicates.

According to the Billings Gazette, North Dakota’s oil production is on track to triple by 2025. All of those wells currently being drilled are going to keep pumping out oil and producing natural gas for a long time. Will Montana’s oil production triple? Who knows?

What really caught my eye in the article, though, were the natural gas production numbers:

North Dakota produced a record 650.8 million cubic feet of natural gas in April. Montana produced 85 million cubic feet for the month, and South Dakota's production was pegged at 42.1 million cubic feet.

I have before discussed North Dakota’s “stratospheric” oil production numbers and compared them to Montana. But this isn’t going to be another post comparing ND to Montana.

No, what made me sit up and take notice was that South Dakota produces fully half the natural gas that Montana does.

You see, as I sit writing this, I am at the family ranch in South Dakota, about 25 miles from the Harding county oil fields. While there are a few wells in the far southwestern corner of the state, more than 90% of oil and all of the gas production takes place up here in the far northwestern corner of the state. In fact, South Dakota's “vast" oil fields currently take up all of 1/2 of one county -- take a look at the map.

By contrast, Montana’s potential oil fields are far more extensive (see the partial map of Montana at the top of the post) and are in multiple parts of the state. It is hard to see how South Dakota’s minuscule fields could reach 10-20% of Montana’s natural gas production, let alone 50%.

One possible contribution could be fracking. I spoke to state Rep. Betty Olson, who along with state Senator Ryan Maher comprises the entirety of the "oil and gas caucus" in the South Dakota legislature, and she noted that while fracking isn’t necessary for oil production in the Red River formation that underlies the South Dakota fields, it has been used there for natural gas production since 1979.

Given that we have some who strongly and vocally oppose fracking in Montana and have increasingly stringent DNRC regulations regarding fracking, it is reasonable to wonder what effect this is having on Montana’s gas production numbers (which have dropped) -- another subject for inquiry, I suppose.

The first question I asked Betty after she mentioned fracking was whether, in 33 years of using that technique to enhance natural gas production in South Dakota, she had heard of any instances of it affecting the quality of well or surface water. Her reply? Not a single one.

Betty and her husband Reuben have been ranching in Harding County for as long as I can remember. I got to know Reuben from his years as one of the members of the crew that long sheared sheep for us and pretty much every other sheep rancher in our area. Betty is also the head of the Harding County Historical Society, and last year I had the pleasure of joining that group for a tour of historical sites in the North Cave Hills -- something I hadn’t done since I was a kid.

I can attest to their love for this land and their concern that this beautiful part of the country not be spoiled for future generations.

Betty is part of an interim SD legislative committee that is studying the impact of the Bakken oil boom as its effects continue to spill over into northwestern South Dakota. The committee is also trying to be proactive about oil and gas development and its effects on landowners, emergency services, schools, roads, and the like -- knowing that it could increase in South Dakota as well.

My point is that while she favors oil and gas development, my impression is that her visceral loyalties lie with the ranchers and other long-time residents in the area. At the first whiff of trouble for water supplies in this arid part of the South Dakota, Betty would be the last person to turn a blind eye to any dangers posed by fracking.

Talking to her, I was struck by the combination -- favoring oil and gas development and being clear-eyed about the potential problems and the necessary infrastructure and long-term planning that will be necessary to manage any boom the future might bring.

Nance Resources and Gas to Green -- a Billings success story in the Bakken

It's Monday, and time for a trip back to the Bakken -- via Billings.

Most of the attention in the Bakken oil boom is rightly on the oil itself -- how many barrels, how many new wells, how many millions of dollars in direct oil revenue.

Some of the things to watch, however, are the businesses that provide support and those that find other opportunities to meet needs as they develop.

In a great article by Jan Falstad in the Billings Gazette, we learn that Brian Cebull, head of Nance Resources in Billings, noted that a lot of natural gas was being wasted in burn-off from North Dakota oil wells not yet connected by natural gas pipelines. Natural gas is a byproduct of oil drilling, and amazingly enough in the early years of drilling, it was just burned off as it came out of the ground and was treated as a nuisance waste product. Today, of course, energy companies have learned to harness this "waste," and 20% of all electricity generated in the U.S. now comes from power plants fueled by natural gas.

Working with his wife, Amy Cebull, Brian Cebull has formed a new corporation called "Gas to Green" (or G2G) that applies existing technology in order to harvest natural gas at its source at wells in the Bakken, gas that currently is not only going to waste but is also producing pollution by being burned off. Falstad notes that up to a third of North Dakota natural gas is being burned off at present. Cebull's service is to capture that gas for the oil producer, who can then transport and sell the gas. As Falstad describes it,

The company installs what is basically a mini-natural gas plant in a trailer that can be hauled out to an oil well to capture, liquefy and store gas emissions.

This is the sort of beautiful win-win situation of the free market at its best. The oil producer simultaneously disposes of gas waste and gets another product to sell. Cebull's company makes money and creates jobs by providing the service. The public gets cleaner air, and for whatever it is worth, as a bonus carbon emissions are reduced (natural gas is the cleanest burning of fossil fuels.) The energy consumer gets more natural gas, which increases supply and helps keep prices down. The company that manufactures the equipment makes more money and creates jobs (G2G has contracted with them to add two new units a month.)

All in all, it appears to be a success story in the making. As a final note, Falstad is one of the "must-read" writers at the Billings Gazette. Her reporting on local and regional business is superb, and she rarely fails to ferret out and highlight the many fascinating entrepreneurial activities going on in this town. The places where we live inevitably have more interesting things going on than we realize. Falstad lifts the hood and gives us a peek at what makes our local economy hum.