The North Dakota Industrial Committee (NDIC) plans to hold a public hearing in November to evaluate changes to pipeline shipping statutes to streamline how oil and gas producers contract firm shipping capacity.
The changes could help producers better predict how much shipping capacity they have to work with, which, in turn, could help them better avoid flaring natural gas. Flaring could lead to curtailments by exploration and production companies (E&P) if they exceed the state-mandated caps.
The revamped rules may also bolster and expedite more energy infrastructure investments by E&Ps and energy firms, according to Department of Mineral Resources Director Lynn Helms. With guaranteed gas gathering volumes, investors “could speed things up by a year or two in terms of building larger infrastructure faster.”
The NDIC, after a hearing was held Tuesday, said the commission’s goal “is to enforce a regulatory framework that provides for fewer service interruptions on gathering pipelines, which would encourage quicker and larger infrastructure expansion, and increase the value of North Dakota’s oil and natural gas production.”
Historical nondiscrimination statutes for gas gathering pipelines set out in state code are unclear about whether a shipper may purchase firm capacity on a pipeline without violating the statute, it said.
“The most common contractual arrangement in the state is one with interruptible capacity, where a shipper has no guarantee or right to transport gas on a system leading to unreliable gathering capacity, increase in well shut-ins, and an increase in flaring,” NDIC said.
Assuring E&Ps via clarified regulatory frameworks that firm capacity purchases are legal and not at risk of violations may alleviate issues that stem from interruptible contracts.
“The potential exists for the state to capture an additional 271.172 MMcf/d,” Helms said. “This increase is the equivalent of providing the annual natural gas consumption for close to 4,100 U.S. homeowners each day.
“Reviewing the application of this existing statute is a step in the right direction that could clear a path forward for more gas gathering infrastructure, which can be used safely and efficiently to its fullest extent.”