As the Biden administration further examines the ramifications of its pause on oil and natural gas leases on federal lands, it will find North Dakota’s Bakken Shale has a “unique story to tell,” according to Department of Mineral Resources (DMR) Director Lynn Helms.
Most of the federal lands in North Dakota are split estates, where small tracts of 10 acres can prevent the development or drilling of much larger 500- or 600-acre adjacent tracts of private or state lands, Helms said last Thursday in reporting the latest monthly production statistics.
In Williams County, he said, a tract near Trenton, ND, was identified “that was nominated for leases at this year’s now canceled March sale, including a 10-acre tract of federal lands that could stop three or four wells from being drilled on nearby private lands,” Helms said. “Because there is so much checkerboarding in North Dakota and split estates, we are going to emphasize to federal authorities that they are subjecting themselves to lawsuits from private mineral owners and the state by blocking leasing on small federal tracts and forbidding the drilling of adjacent privately held minerals.”
[Brighter Days Ahead: Listen in as Price & Markets Editor Leticia Gonzales looks forward at the North American natural gas market as it recovers from the historic freeze that crippled Texas on NGI’s Hub & Flow podcast.]
The adverse economic effects of pausing permitting to drill on federal lands is not as onerous in North Dakota as in some other producing states, Helms said. However, some states don’t have the spillover of economic effects on private and state lands. On the plus side, North Dakota has a tribal lands exemption it may apply to ease the impact.
Meanwhile, North Dakota lawmakers are weighing in on gas capture and electricity reliability, particularly in the oilfields. Proposed legislation is moving forward including state Senate Bill (SB) 2065 that deals with permitting and legal processes for developing storage for natural gas, propane, hydrogen, and natural gas liquids.
“They are looking for a solution to the situation Texas faced last month by using natural gas storage supplies that will be shifted from heating to electric generation,” Helms said. “That’s an important policy piece.”
State House Bill 1452 would establish a Clean Stable Energy Authority. In addition, SB 2014 proposes funding for studies on gas storage to enhance the state’s ability to develop a petrochemicals industry. The key is to have more storage to increase statewide reliability in the face of a super freeze like Texas experienced, Helms said.
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