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Legislative Report District 13: Committee discusses energy topics

Last week the legislative interim committee on Energy Development and Transmission met in Bismarck and heard significant testimony on key energy related topics. Presentations by state department heads focused much attention on the impacts of the oil and gas development in North Dakota. The agenda included updates on flaring, pipeline regulation, transportation of crude oil, roads and bridges assessment, waste site permitting and overview, environmental incident remediation and reporting and emergency services.

The information provided was lengthy and voluminous. All of the testimony will be posted on the state’s website and can be found at in the interim committee section. In reviewing the materials presented you will find that reporting state agencies are implementing the legislative initiatives set forth by the 63rd legislative assembly to mitigate impacts resulting from the energy development activity in our state.

One of the key presentations was by the North Dakota Petroleum Council and its efforts and targets to reduce flaring in the Bakken play. To date, the industry has spent over $6 billion to capture and transport gas since January of 2006, which is considered by most as the start of the play. There are another $1.7 billion of new infrastructure projects announced that would further enhance the reduction of flaring. We heard testimony that the goals for the reduction of flaring are as follows:

  • Capture 74 percent by the fourth quarter of 2014.
  • Capture 77 percent by the first quarter of 2015.
  • Capture 85 percent by the first quarter of 2016.
  • Capture 90 percent by 2020 with a potential of up to 95 percent

There are significant variances in flaring rates on private and state land versus flaring on Ft. Berthold Indian Reservation lands. Currently flaring is at 27 percent of non-FBIR and 40 percent of FBIR production. As of today, the state overall is flaring 29 percent of state gas production with 60 percent coming from 216 wells.

There are unique challenges that the industry must overcome in addressing the flaring issues. Topography, tribal policies, securing right of ways from landowners and greater permitting scrutiny are some of those challenges. However, a significant milestone will occur in our state effective June 1, 2014 to help insure that these goals are in fact achieved.

On June 1 of this year, all new Application Permits to Drill (APD) must have a Gas Capture Plan (GCP). Without a GCP, no APDs will be issued. Additionally, for all existing wells that are currently flared, producers must submit a GCP by Sept. 1 of this year on large volume wells. Also, by March 1, 2015, producers must submit a GCP for all other wells that have been flaring longer than 90 days, excluding marginal wells. Failure to submit GCP will result in suspension or denial of new well permits and curtailment of production to existing wells. Failure by producers to comply with approved GCPs will result in curtailment of production. All of these measures will help to ensure that the oil and gas industry is diligent in its efforts to mitigate flaring.

A related issue to flaring is the oversight of gathering lines from wells. House Bill 1333 established North Dakota as the first state in the nation to undertake regulation of gathering systems, which will begin on April 1, 2014. With 18,000 miles of existing lines and more on the way, this is no small feat. The industry must also now adhere to new electronic mapping requirements for gathering lines. House Bill 1333 also established a $75 million cleanup fund and rules for mediating pipeline disputes. The North Dakota Industrial Commission is also developing a “hotline” for reporting surface owner issues related to pipelines. This “hotline” will further ensure another level of quality control in the production of oil and gas.

Collectively, what legislators heard at the most recent interim committee was encouraging as we seek to balance developing our resources while mitigating risks. Strides continue to be made on many fronts in this balancing act and in the months between now and the upcoming legislative session the Energy Development and Transmission Committee will be assessing what other legislative actions may be required by the 64th legislative assembly. A significant study of impacts of the oil and gas industry is currently underway and will be presented to the committee in the next few months to aid in this process.