Natural Gas Fight Flares Up

North Dakota regulators have given the oil industry an additional 10 months next year to cut down on the flaring of natural gas but also implemented a stiffer long-term benchmark.

Previous year a group of oil companies set goals for the industry to capture a specific amount of natural gas by a set date, which the Industrial Commission approved.

“This is a real wake-up call, I think”, House Majority Leader Al Carson (R-Fargo) said.

Carlson recalled that lawmakers had lengthy discussions with Moody’s during the legislative session about whether its oil price and production forecasts should be downgraded, “but we kind of hit a stone wall with them when we were talking sales tax and income tax”.

The commission also passed a gas capture credit system, crediting companies who have exceeded capture goals up to 90 days if they were to fall below future goals.

“We’re at halftime. …”

Attorney General Wayne Stenehjem, who sits on the commission with Governor Jack Dalrymple and Agriculture Commissioner Doug Goehring said, “I’m interested in the end game – where do we wind up”.

Industry officials cautioned that not extending the deadline would force operators to scale back drilling and not complete wells, resulting in less tax revenue and layoffs that would hurt the state’s economy.

The oil rigs in North Dakota are vanishing, a sign that the slide in oil prices is taking a big toll. There’s an interim goal of 80 percent on April first.

The industry sought an extension on the 15 percent benchmark until November 1, 2017, due to problems with federal permits, land access permission for pipelines, and delays in the development of gas processing plants.

Twenty percent of the gas produced statewide was flared in July, the most recent month for which statistics are available.

Wayde Schafer, a spokesman for the North Dakota chapter of the Sierra Club, said he sees little assurance that flaring will actually be reduced beyond 10 percent, and objected to the 10-month extension of next year’s target.

“I think what really is happening is we are seeing the severe decrease because of the number of decreased rigs in the state”, she said.

“If you want to put the stake in the ground at 91 percent in 2020, have at it. We will do our best to get there….”

“It’s a big project – $13 billion”, said Ness.