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North Dakota Reaffirms DUC Rules, Keeps One-Year Extension

Although it expects to be asked by operators to classify hundreds of drilled but uncompleted (DUC) wells as "temporarily abandoned" over the next five months, the North Dakota Industrial Commission (IC) voted unanimously to reaffirm its one-year extension for such wells to be completed.

Under current IC rules, from the moment a well is drilled to total depth an operator has one year to bring the well into production. After the one-year deadline, the well falls into an abandoned status and is considered in violation of IC rules. The operator then has three choices: place the well into production, plug and abandon the well, or request temporarily abandoned status, which lasts for one year.

On Thursday, the three-member commission -- Gov. Jack Dalrymple, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring -- reaffirmed the one-year deadline, but indicated they would continue to take petitions for temporarily abandoned status on a case-by-case basis. The petitions are expected to be granted if they meet certain criteria.

"We just wanted to make sure that the commission was still OK with the way we granted temporarily abandoned status, and that they didn't want us to force these operators to put their wells into production," Alison Ritter, spokeswoman for the state's Oil and Gas Division (O&G), told NGI's Shale Daily on Friday. "The commission agreed that the best place to store the oil right now is in the ground."

According to Ritter, there were 993 DUC wells in August, the most recent month where figures were available. She said O&G anticipates that, beginning in December and running through March 2016, operators will be petitioning the IC to grant temporarily abandoned status to 100 wells per month.

The status prevents operators from losing their permits and, temporarily at least, spending additional money on the wells.

"That is more than we have ever had to do in the past," Ritter said of the expanding list of DUC wells. She added that Lynn Helms, director of the state's Department of Mineral Resources, "wanted to make sure that the IC was comfortable with our current policy before moving forward with a very large amount of temporarily abandoned requested wells."

Over the last few weeks, and in the wake of ongoing low commodity prices, there was speculation that the IC could ease the completion requirements by extending the deadline for temporary abandonment status (see Shale DailyOct. 14Oct. 1).

On Friday, the O&G reported that there were 68 active drilling rigs deployed in the state, down 64.9% from the 194 rigs deployed one year ago.

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