Bakken flaring is in the news again. A sustainability group published a report touting the billions in lost revenue from natural gas flaring. It's a contentious topic that isn't going to disappear until flaring is reduced.
The study estimated that as much as $1 billion in revenue was lost in 2012. The report assumed a natural gas value of $13.50/mcf (this includes the value of NGLs). While the natural gas produced from the Bakken has a high btu content, it does not have a local market like other areas of the U.S. We'd put $13.50 on the very generous side.
If one billion or more in revenue had been lost in a single year, operators and midstream companies would be closer to making the financial commitments necessary to eliminate flaring.
Instead, midstream companies are waiting for commitments from operators and more assurance that production will be here for the long haul. Money isn't made building pipelines for peak production.
WBI Energy, a subsidiary of MDU Resources, is preparing for a open season for commitments on a pipeline that will move natural gas to Minnesota. If the pipeline goes forward, it will be in service some time in 2016 and will have capacity to move more natural gas than what is currently flared.
Revenue Lost Was Likely Much Lower
In actuality, I believe the amount of revenue lost was closer to 25-50% of the estimates provided in the report. When you only get a fraction of the $250-500 million in revenue lost, it makes building multi-billion dollar infrastructure a much more difficult decision.