BISMARCK, N.D. (AP) — North Dakota regulators have adopted the most stringent rules to date aimed at reducing the amount of natural gas that is burned off and wasted as a byproduct of the state's soaring oil production.
The state Industrial Commission, which regulates North Dakota's oil and gas industry, endorsed a policy Tuesday that sets goals to reduce flaring in incremental steps through 2020. The new rules allow regulators to set production limits on oil companies if the targets are not met.
"There are going to be a couple of producers out there who will feel the pinch and are going to be scrambling," said Gov. Jack Dalrymple, who is chairman of the Industrial Commission, which also includes Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring as members.
Dalrymple said the new rules would be "meaningless" unless the state strictly enforced them.
"I hope what we do today, we are serious about," Dalrymple told Lynn Helms, director of the state Department of Mineral Resources, whose agency oversees oil drilling.
North Dakota drillers currently burn off, or flare, about 30 percent of the gas because development of pipelines and processing facilities to capture it hasn't kept 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.
North Dakota, the nation's No. 2 oil producer behind Texas, is producing about 1 million barrels daily. The state also produces more than 1 million cubic feet of natural gas daily that comes when an oil well is drilled. The state is losing nearly $1 million monthly in natural gas tax revenue from flaring at present, state tax department records show.
The new flaring rules require flaring to be reduced to 26 percent by Oct. 1 and 90 percent within six years as infrastructure catches up with oil development. Companies that fail to meet the goals could have production at a well limited to as little as 100 barrels a day, depending on the amount of gas flared.
The percentage of flared natural gas in North Dakota has remained around one-third of production in recent years, though the overall volume has dramatically increased.