Partners in flare reduction

The venture between a relatively new technology provider and a nationally recognized EPC contractor hints at the current state of flare reduction in the Bakken and what some are doing to provide solutions to the challenge.
By Luke Geiver | June 23, 2014

North Dakota Gov. Jack Dalrymple believes that 2014 will be a pivotal year for the state’s oil and gas industry and that several years from now, developments and regulations put in place this year will be credited for forming the industry’s future. For Dalrymple, the future starts this summer, when regulations designed to promote greater flare gas capture take effect. “We are a state that has encouraged oil and gas production, but we are not a state that has been soft on regulation,” he says.

A relatively young Bakken-based flare gas capture technology provider and a nationally recognized engineering, procurement and construction (EPC) contractor both hope the governor’s belief that this summer’s flare gas regulations will help to shape the future of the Williston Basin will come to fruition. Less than a month before the state implemented its regulatory process designed to force operators to capture more of the associated gas produced at the well site, and just days before the governor made his statements about 2014’s impact on the Bakken’s future, GTUIT LLC and Corval Group announced a unique partnership that could not only help the state to reduce flaring, but also thrive with, because of the greater emphasis by operators to invest even more into flare reduction.

GTUIT, a Montana-based remote flare gas capture technology and service provider formed in 2009, and Corval Group, an EPC contractor responsible for building several gas compression stations in North Dakota and working on other major oil and gas infrastructure developments, announced a strategic partnership in late May. The idea for the partnership—in the works for roughly one year— is simple: Help upstream operators and midstream processors establish unique solutions to their flare-linked challenges. With new regulations requiring operators to focus on something other than oil extraction, the partnership believes it can help operators utilize the associated gas resource without investing additional time into the process of doing so.

To date, no partnership formed to address flare-based issues in the Bakken has featured two entities with as much boots-on-the-ground experience as the GTUIT-Corval Group team-up, according to Dave Reif, vice president of business development for Corval Group. And, to date, there has not been the level of regulation on flaring that is now present in the state. The formation of a partnership that offers Bakken oilfield experience with new ways to address flaring is a good thing, Reif believes. Since 2009, Corval Group has been looking for a way to enter the upstream oil industry. “What became obvious about the partnership early on for us was that there was not going to be one company able to solve this problem [flaring] for the industry. It would have to be multiple companies working together in smart ways and listening to what operators would need,” he says. After a full year of due diligence performed by both sides of the partnership on how each entity might benefit the other or fit into to preestablished company cultures, Reif is excited to talk about the venture, even admitting that although he is excited, the partnership might seem unusual.

A closer look at the industry’s needs for flare reduction and the innovative venture reveals why Reif is excited. 

From Trade Show Floor To Well Site
Brian Cebull, president and CEO of GTUIT, will never forget sitting down at a Starbucks Coffee shop in Grand Forks, N.D., following a Bakken trade show. After speaking with members from the Corval Group team at a nearby booth during the show, Cebull joined up with Kurt Swenson, executive vice president of Corval Group and Reif to discuss a potential working relationship over coffee. The talk represented a moment of accomplishment for Cebull, the leader of a company founded in 2011 to treat flaring at remote well sites. “We started the company from an idea,” he says. “We now have equipment and systems running out in the field.” GTUIT’s success stems from its technology that removes the natural gas liquids (NGLs) from associated gas streams. “We knew we weren’t going to be the company that would be offering all of the possible flaring solutions. But, we wanted to be a key piece of the solution.”

The sit-down with Corval Group at Starbucks proved to be the moment that helped Cebull realize his vision for expansion. Over the next year, Cebull met with Swenson, Reif and others from Corval more than a dozen times to develop the partnership’s capabilities.

“Both sides were honest and upfront with each other from the start. We told each other that there might be nothing to the idea of working together, or, there may be something,” Reif says of the partnership’s early days. “We needed to understand the model that they were using and if it would fit us.”

According to Swenson, the GTUIT model was exactly what Corval Group had been looking for. Corval Group has worked on several large-scale Bakken-based projects, ranging from transload facilities to gas compression stations. The EPC has also worked on refineries outside of the Williston Basin and even the Minnesota Twins stadium. But, until it officially starts working with GTUIT, Swenson’s team will have never worked in the Bakken’s upstream sector. “Today we are very strong in the midstream and downstream sectors,” he says. “Putting our welders and our boots on the ground that can do work on the well pads will help us launch into the upstream sector.”

Together, Cebull’s and Swenson's teams will work with operators to evaluate all flaring streams and how they might be utilized. “The oil producers have a portfolio of wells and they have drilling permits in front of them. The gas companies have a set of assets that are now or will be going into the ground. We want to provide operators analysis of the best solutions based on all of that information in combination with the operator’s needs,” Swenson says. In some cases, it could be using multiple GTUIT units, or in other cases, it could mean adding power generation sourced from well site gas. “The solution could be one of many things.”

Corval will help fabricate and install any infrastructure needed on the well site from piping to skid mounted units. The service will help to accelerate the timeline required for getting wells equipped to reduce flaring, and for GTUIT, it means getting more units into the field faster. Corval will help to build the compression refrigeration modules that are critical to the GTUIT technology platform.

GTUIT will continue to service and maintain its technology used in the field, an approach that Swenson was drawn too. “No one else is offering the service that we see from GTUIT. They can interface with production companies and operators. They live up to the commitments that they have made,” Swenson says.

The pitch for the partnership is based on the GTUIT technology that can capture the valuable NGLs for the gas stream, Corval’s project management reputation along with its abilty to assemble well site infrastructure, and, the equal opportunity approach the partnership is taking to flaring solutions.

“We aren’t under any misconceptions that there aren’t other solutions out there,” Reif says. The strength of the partnership is about using the best available approach in any given situation, he adds, something the project management expertise of the Corval side of the partnership will use with operators.

“I talked to an operator recently that had multiple contracts and multiple pieces of equipment to manage and handle. They don’t want that. They want a one-stop solution,” Cebull says. To provide an all-encompassing solution, the partnership will work with several technology providers. Although the NGL extraction technology is core to everything, other technologies can and will be bolted on, Swenson says.

“We will actually end up working with a lot of the other technology providers,” Cebull says. “We will work with them to integrate in with our system and get real solutions on the ground.”

Flaring Solution Providers Needed
The advent of the gas capture plan era forces operators to look more closely at how they can and ultimately will capture more flared gas. Within two years, the gas capture plan designed by the North Dakota Petroleum Council could help the industry to capture roughly 90 percent of all associated gas produced in North Dakota. The monthly average of gas flared has hovered around 33 percent the past several months. Remote well sites that may never connect to a gathering pipeline, or wells in specific regions of the play, have often been the main contributors to flaring. Some of the largest operators in the Bakken, including Continental Resources, capture roughly 90 percent of all the gas it produces.
In April, Cebull and many other industry representatives provided testimony and perspective before the North Dakota Department of Mineral Resources. The packed-house event focused on the development and implementation of a gas capture plan. Since the meeting, the North Dakota Industrial Commission has approved the GCP plan. The NDIC has delayed the DMR’s ability to enforce production delays following the absence of a GCP for 90 days starting in June, however.

“The most important thing for us to remember and for the industry to remember, that we heard from the hearing and that we continue to hear, is that the regulatory climate is changing. It is happening right now,” Cebull says.

“The market is changing so fast,” Reif says. “The dynamics of a given well pad could change every 60 days depending on how the infrastructure is being developed around it. To be fair to the opportunity of utilizing the gas stream, we are going to have to innovate our way to some of the solutions.”

That is the challenge for the recently formed partnership and the rest of the industry, Cebull says, to find ways to show a meaningful flare reduction impact. “We need to show that if you are doing something, you can have a meaningful impact on flaring,” he says.

To Swenson, the formation of the partnership will help it succeed when others might fail. With the partnership, he says, the team can offer speed to market for all of its services, from well site infrastructure construction and project design that a technology provider may have struggled with, to manufacturing the well site technology itself.

Reif believes the partnership will succeed if it can keep a pulse on the industry and understand all that is happening, from pipeline infrastructure to well pad design.

“If you have real technology that an operator wants to try, we will get it on the ground,” Cebull says.

Even with the excitement of what the team feels it has to offer, their outlook on the future is telling of just how much the flaring segment of the Bakken’s development will change. “We are prepared to significantly advance the deployment of remote capture technology as the long-term infrastructure is being built out,” Swenson says. “We don’t see our solutions as permanent, but we want to accelerate the interim step in a significant way.”

Author: Luke Geiver
Managing Editor, The Bakken magazine
lgeiver@bbiinternational.com
701-738-4944