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The Gas Glut

January 08, 2019

According to US News and World Report, drillers in oil fields in North Dakota are burning off nearly enough natural gas to meet the demands of that state and neighboring South Dakota.

Drillers in North Dakota and other regions in the current oil boom have found themselves awash in natural gas but constrained by bottlenecks to bring it to market. The substance is produced with crude oil, but oil is generally more lucrative and has seen its prices hovering above the projected break-even point for U.S. shale operations. That means that with limited pipeline capacity, producers are committed to transporting oil and content to let natural gas burn off into the atmosphere.

Permian Basin shale drillers have produced such quantities of oil – and had such limited pipeline capacity – that natural gas prices at times fell below zero.