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North Dakota Sets Bakken Oil Content Rules

Moving in the same direction as federal regulators about Bakken Shale crude oil transport, the North Dakota Industrial Commission (IC) on Tuesday adopted regulations requiring all of the state's oil supplies to be conditioned.

The new rules would apply to all production in the state, including the substantial supplies coming from the Fort Berthold Reservation on federal lands. They would also prohibit "blending back" of natural gas liquids (NGL) into the crude shipments.

Addressing the liquid content of light sweet Bakken oil that is being produced at an increasing rate of more than 1 million b/d, the rules would take effect April 1. Gov. Jack Dalrymple said the IC order makes it clear that a stabilization process, common in other oil and gas basins around the country, including the Permian Basin, would take place on every barrel produced in the state.

The rules would amount to a significant change in operations for nearly half (45%) of the producers for their heating and treating of supplies before shipment. There would be added costs of an unspecified amount, and an emphasis on "science and enforcement" by the Department of Mineral Resources (DMR), which would implement the rules, according to Director Lynn Helms.

"No exceptions will be allowed to the new rules; there will be a conditioning/stabilization process applied to every barrel of Bakken/Three Forks crude oil," said Helms, adding that companies not complying would face fines of up to $12,500/day.

The three-member IC, Dalrymple, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring,  unanimously voted to adopt the revisions in November (see Shale Daily, Nov. 14).

The IC said:

  • An estimated 80% of Bakken wells would be able to produce supplies that fall below the 13.7 pounds/square inch (psi) vapor pressure limit by complying with the state's new temperature and pressure parameters for supplies; and
  • Roughly 15% of Bakken wells now operate equipment prescribed in the rules, and operators need to demonstrate through sampling and testing that they are in compliance with national standards that vapor pressure be no greater than 13.7 psi.

"With the strong science and enforceability of the order, North Dakota will be requiring that every barrel of Bakken crude oil will be conditioned," the IC said.

To produce the new order, No. 25417, the IC initially received 1,114 pages of testimony from 33 groups or individuals, and subsequently drew 141 more pages of testimony from 25 groups.

Additional technical changes reflected in the final new rules include making the temperature threshold for the oil testing 110 degrees F, rather than the previous draft's 120-degree threshold.

"What we learned through additional comments is that the requirement above 115 or 120 degrees would put the whole gas gathering system at risk -- thousands of gas gathering contracts and thousands of miles of high density polyethylene pipe," Helms said. "We found we could accomplish what we are after at 110 degree F." This temperature threshold with the use of proper vapor recovery equipment would allow operators to meet the new requirements, he said.

The IC has moved quickly on finalizing the new regulations to keep pace with a four-part federal effort, of which content rules are one part (see Shale Daily, July 24).

A spokesperson for the North Dakota Petroleum Council said the producers’ group would “need some time to very carefully review and analyze the order with our members to determine what the implications may be.”

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