BISMARCK, N.D. — North Dakota’s oil industry likely won’t meet a Jan. 1 target set by new self-imposed rules that require reducing the amount of natural gas burned off as a byproduct of oil production, the state’s top energy regulator said Wednesday.
Problems with federal permits, land access permission for planned pipelines, stalled processing plants and increased natural gas production will make reaching new capturing goals “essentially impossible,” state Mineral Resources Director Lynn Helms told North Dakota’s Industrial Commission, which regulates the oil and gas industry.
The three-member panel headed by Gov. Jack Dalrymple adopted the rules last year to reduce flaring to 90 percent in incremental steps through 2020. The new rules, which were drafted by the oil industry, allow regulators to set production limits on oil companies if the targets are not met. The rules also require oil companies to craft a natural gas capturing plan before a well is drilled.
North Dakota, the nation’s No. 2 oil producer behind Texas, is producing about 1.2 million barrels daily. The state also is producing a record 1.6 million cubic feet of natural gas daily that comes when an oil well is drilled.
Until the new rules were imposed, North Dakota drillers burned off, or flared, about a third of the gas because development of pipelines and processing facilities to capture it didn’t keep pace with oil drilling. Less than 1 percent of natural gas is flared from oil fields nationwide, and less than 3 percent worldwide, the U.S. Energy Department said.
Data show the industry is capturing 82 percent of the natural gas at present. The industry is required to capture 85 percent by Jan. 1.
Helms said the industry wanted to extend the 85 percent threshold to Oct. 1, 2017. But Helms recommended meeting the industry “part way,” and extend the deadline until Oct. 1, 2016.
Gov. Jack Dalrymple, who heads the three-member Industrial Commission and has been critical of North Dakota’s high flaring percentage, said more information is needed in writing on why the goals won’t be met.
“We need to have this because when we go to explain to other people, we need some very clear reasons, some very clear events that have taken place that reasonably they could not have anticipated, “Dalrymple said. “Otherwise we just lose all credibility with this.”
The commission, which also includes Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring, took no action. The issue is slated to be on the agenda when the commission meets again next month.
Dalrymple said even with documentation, “I’m not sure what I’m willing to do.”
Ron Ness, president of the North Dakota Petroleum Council, said the industry has already invested more than $11 billion in infrastructure to capture natural gas in the past eight years and plans to spend at least an additional $2 billion building gas pipelines and other infrastructure.
The industry is currently ahead of its self-imposed gas capturing goal by about 5 percent but problems bringing pipelines and gas processing factories online over the next few months, along with depressed prices, make it a challenge to meet the Jan. 1 goal.
“It’s frustrating,” he said.
This article was written by James Macpherson from The Associated Press and was legally licensed through the NewsCred publisher network.