Exxon Mobil Corporation (NYSE:XOM) Unit Seeks Preferential Treatment In Gas Flaring Rules

A unit of Exxon Mobil Corporation (NYSE:XOM) known as XTO Energy is having problems with handling the excess gas it produces at 140 of its oil wells in McKenzie and Dunn counties in North Dakota. The unit is asking authorities in the state to allow it burn off more gas beyond the current limits to deal with the prevailing problem. The request will be discussed by the state’s industrial commission.

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Exxon Mobil Corporation (NYSE:XOM)’s XTO Energy has nowhere to channel the excess gas it produces at the McKenzie and Dunn oil wells, the company told the authorities in Dakota. The major reason for the current predicament is that gas processing company known as OneOK was unable to secure the agreement to expand its pipeline. OneOK proposed to build a 20-mile pipeline to ease the movement of gas, citing that the pipeline expansion would have moved additional 40 million cubic feet daily to their gas plant known as Garden Creek in McKenzie County.

XTO sell gas OneOK

Exxon Mobil Corporation (NYSE:XOM)’s subsidiary XTO sells gas from the 140 oil wells to OneOK, but it flares 38% of the gas produced at the wells and only sells the rest.

XTO’s request to burn more gas than currently authorized has already gone through hearing by Dakota oil and gas division and will now be heard by the state’s industrial commission, which had defined the gas-capture rules while imposing penalties on violators.

The handling of excess gas is an enormous challenge for XTO. The company had already slowed down its gas production in the months of February and March in an effort to comply with the regulatory requirements. Additionally, the company has also withheld bringing new oil wells on line because of the predicament in meeting the gas-capture rules.

Energy regulators in Dakota might ask oil companies to cut their production or impose production limits if the set gas-capture targets cannot be met.

XTO’s current gas-capture predicaments might persist until 2016 when a proposed gas plant known as Bear Creek in Dunn County comes on line.

Exxon Mobil Corporation (NYSE:XOM) is one of the many oil companies hit by the steep decline in crude oil prices.

About the Author

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.

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