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North Dakota Flaring Goals in Jeopardy, State Official Says

It is unlikely that producers will be able to meet North Dakota’s next natural gas capture goal early next year, so the state's chief energy regulator on Wednesday asked elected officials to postpone the requirement, which is set to begin Jan. 1.

The request from Lynn Helms, director of the state Department of Mineral Resources (DMR), was continued for the next meeting of the Industrial Commission (IC), a three-member panel of the governor, attorney general and agricultural commissioner. The IC asked for more details supporting the postponement for its meeting Sept. 17.

At issue is a series of phased-in goals established by the state last year (see Shale DailyJuly 3, 2014) that producers generally have been meeting or exceeding in recent months. In June, with a goal of 77% capture in effect, an average of 82% of wellhead gas was captured statewide.

Helms asked the IC to consider pushing back the 85% goal to Oct. 1, 2016 to allow more time for gas processing and takeaway infrastructure to be built (see Shale DailyDec. 11, 2014) and production declines driven by lower crude oil prices (see Shale DailyAug. 20).

The set of circumstances driving the need for postponement include a 20% increase in wellhead gas production tied to the move by producers to concentrate drilling in the Bakken Shale sweet spot centered in four prime counties (Dunn, McKenzie, Mountrail and Williams), Helms told the IC, along with weather and federal regulatory delays, which have held up completion of gathering and processing infrastructure projects.

Another concept that Helms introduced was to allow producers to "bank" up to three months in which they exceed the capture goal for use in future months when they are prevented from meeting a higher goal. He also suggested that exemptions be given operators on federal lands with small well pads.

The IC asked Helms to obtain more details on the reality of the impacts on meeting future flaring goals, and if there is a postponement in the upcoming goals, whether producers would be willing to move up the deadline for the final goals.

"They are looking for a little give-ground to get-ground," said a DMR spokesperson who attended the IC meeting.

Last year, when producers agreed to the target goals working all the way to eventual 95% capture, they stipulated a number of supporting factors, including more gas processing plants being completed, the ability to get gathering infrastructure rights-of-way and recognition that state oil-conditioning requirements will increase wellhead gas volumes, the DMR spokesperson said.

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