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N.D. oil industry opposes state rule changes

Brady Pelton, left, and Kari Cutting, both of the North Dakota Petroleum Council, testify Wednesday on proposed oil and gas rules during a North Dakota Industrial Commission hearing in Bismarck. Tom Stromme / Bismarck Tribune

BISMARCK—The North Dakota oil industry pushed back Wednesday on several proposed oil and gas rule changes, expressing strong opposition to a rule related to reporting small spills.

The Department of Mineral Resources is taking public input on potential administrative rules, including a proposal in response to the law change approved this year that no longer requires spills under 10 barrels to be reported.

The department now proposes requiring oil companies to file a document, known as a sundry notice, within 10 days after cleanup of any spill that was not reported. The notice would include details about the spill, such as the type of liquid and an explanation of how the spill volume was determined.

The North Dakota Petroleum Council, representing more than 500 companies, called the proposal a "backdoor reporting requirement" that goes far beyond what legislators intended.

The industry group also objected to a new proposed rule that would require a full environmental assessment at a well site if there was uncertainty about spills or possible contamination.

No landowners testified Wednesday at public hearings held in Bismarck and Dickinson. The Northwest Landowners Association, which opposed changing the spill-reporting requirement, is planning to testify in support of the sundry notice proposal at a hearing in Minot.

"It's still our property, and we want to know about every spill," Chairman Troy Coons has said.

The oil industry group also objected to proposed changes to royalty statements introduced in response to a growing frustration among royalty owners about deductions being taken from their payments.

The department proposes requiring companies to clearly identify the amount and purpose of each deduction or adjustment made to a royalty payment.

Brady Pelton, government affairs manager for the Petroleum Council, said the proposal will not provide meaningful information to royalty owners and will cost companies an estimated $500,000 to $1 million to develop the software necessary to comply.

"The burdens on operators in North Dakota resulting from these changes could conceivably make the state a less competitive environment in which to operate," Pelton said.

Jim Starr, a royalty owner who traveled from Minneapolis to testify at the Bismarck hearing, said the rule change would be a "welcome first step." But he cautioned that it won't be effective unless there is a clear enforcement policy.

"I don't know how any rule changes can be enforced without some teeth in it," Starr said