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North Dakota: Production Restrictions Not Needed to Combat Flaring

Industry representatives in North Dakota on Tuesday told the state's Industrial Commission that flaring can be reduced without production restrictions or a "one-size-fits-all" regulatory scheme. They urged state officials to adopt an industry task force's recommended approach submitted earlier this year (see Shale Daily, Jan. 30).

The commission, which oversees the state Department of Mineral Resources (DMR) and its oil/gas division, conducted a daylong hearing on the proposed gas capture plan requirements that are set to become effective June 1. The requirements would reduce flaring along the lines of the industry's proposal from the current 36% level to 10% by 2020.

Flaring has returned to record levels in the state. In January, DMR said flaring was inching toward the all-time high level of 36% experienced in September 2011 (see Shale Daily, Jan. 15). In February, DMR confirmed the record level had been reached again (see Shale Daily, Feb. 14).

In March, DMR Director Lynn Helms outlined plans for the state to require, beginning June 1, gas recovery plans from operators seeking new drilling permits (see Shale Daily, March 5). Industry representatives Tuesday urged state officials to let the recovery plays work without imposing punitive regulations that restrict production on wells that are slow to reduce flaring volumes.

"No one wants to reduce flaring more than the operators," said Ron Ness, president of the North Dakota Petroleum Council (NDPC), which submitted the industry's flaring plan in January. Nevertheless, the hearing pointed up continuing tension between landowners and the oil/gas operators over flaring and how punitive the new rules should be.

"Since we began our task force [on flaring], we have seen an increased focus all the way to the top of companies," Ness said. "They are now looking at each of their well permits and their layouts. There is now much better communications with the gas processing companies."

However, Theodora Bird Bear, a representative of the Dakota Resources Council, which includes landowner and mineral rights owners, said operators should listen to and communicate regularly with landowners, particularly regarding rights-of-way issues related to building more gas processing infrastructure in the state. Some producers are blaming impasses with landowners in rights-of-way negotiations as holding up efforts to reduce flaring.

Saying that more monitoring needs to be done on potential health impacts for people living near flaring, Bird Bear said in response to a question from Helms on cases of landowners blocking pipelines from being built that "there needs to be a genuine commitment to involve the landowners."

Another representative of landowners in the Bakken, Tom Wheeler, said the industry should not "blame landowners for the flaring," and that 99% of the landowners will agree to easements for pipelines if the deal is "fair." He praised the DMR's proposal to establish an online, web-based hotline for informing landowners of oil/gas operations on their land.

Brad Aman, a vice president for production with Continental Resources, represented the NDPC's flaring task force's recommendations for establishing gas capture on a well-by-well and individual operator basis. "This gas capture plan process does work," Aman said. "I've seen it."

While advocating that the DMR and the commission regulate the flaring cutback process, Aman urged that "production restrictions" are not needed to make the program work. He and other industry representatives said individual operators already are succeeding in curbing flaring.

Aman said much infrastructure still needs to be built on an industry-wide basis and the gas capture plans will help operators do that. He thinks the industry's five-step approach will allow the amounts of flared gas to be substantially decreased.

A petroleum engineer with ConocoPhillips, Ralph Castillo, outlined his company's efforts to coordinate more closely with midstream infrastructure providers before obtaining permits to drill new wells in the Bakken. ConocoPhillips has a goal of having 100% connection of all new wells.

"[We] believe it’s an action plan with which we can achieve the targeted flaring reduction, and therefore we do not support future production restrictions or curtailment of oil/gas production," Castillo said. Many other industry representatives echoed his comments during the hearing. But some speakers cautioned that just having wells connected to gas gathering systems does not guarantee that there will be no flaring.

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