Oil companies fight ND plan to slow production

Published on NewsOK Modified: April 22, 2014 at 4:54 pm •  Published: April 22, 2014
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BISMARCK, N.D. (AP) — Dr. Lyle Best traveled nearly 200 miles from the heart of North Dakota's oil patch Tuesday to tell state regulators one thing: "Slow down."

The North Dakota Industrial Commission is considering a proposal that would cut back on the state's booming oil production as a means of controlling the amount of natural gas that's being burned off at well sites and wasted as a byproduct of the more valuable substance, oil.

But oil companies are fighting the idea of slowing production, and want regulators to consider self-imposed steps to curb natural gas flaring, such as submitting plans for natural gas gathering before applying for a drilling permit.

North Dakota drillers currently burn off, or flare, a record 36 percent of the gas because development of pipelines and processing facilities to capture it hasn't kept pace with oil drilling. The U.S. Energy Department says less than 1 percent of natural gas is flared from oil fields nationwide, and less than 3 percent worldwide.

Best, a Watford City physician, was among more than two dozen people who testified on the new proposal. Best said he lives within 200 yards of two oil wells that emit flares at least 20 feet high and produce a sound "similar to a jetliner passing nearby."

The biggest issues with burning the gas, he said, is wasting it and the potentially harmful emissions that may be released from flaring.

"Some mild restrictions on this activity would go a long way toward improving a host of problems related to oil development, not the least of which is gas flaring," Best said.

North Dakota, which is producing nearly 1 million barrels of daily, also produces more than 1 million cubic feet of natural gas daily. The state is losing nearly $1 million monthly in natural gas tax revenue from flaring, state tax department records show.

Oil producers can flare gas without paying taxes on it for up to a year, but companies are almost always granted waivers after that.

The North Dakota Petroleum Council's flaring task force said the industry has already invested more than $6 billion in infrastructure to capture natural gas in the past six years and plans to spend at least an additional $1.7 billion over the next two years building gas pipelines and other infrastructure. The council in January pledged to capture 85 percent of the gas by 2016, and 90 percent within six years as infrastructure catches up with oil development.