North Dakota to Extend Flare Rules Deadline

Posted by Joseph Keefe September 24, 2015

North Dakota is poised to give the energy industry up to two extra years to curb the amount of natural gas burned off at oil wells, a move that would ease worries pipeline construction delays make it impossible to meet aggressive flaring standards.

Governor Jack Dalrymple and the two other members of the North Dakota Industrial Commission (NDIC), who spent months last year finalizing the rules, will mull oil companies' request for the extension at their Thursday meeting.

"These were lofty goals, but things have changed a bit and we've got to take that into consideration," Doug Goehring, an NDIC member and the state's agriculture commissioner, said in an interview. "We're probably going to have to extend the deadline."

Goehring, who said low commodity prices will influence his vote, has an outsized influence over oil regulation due to his seat on the NDIC.

Environmentalists oppose any extension and note the volume of gas flared in the state continues to rise as more oil wells are drilled, despite the best intentions of existing regulations.

"We're just hoping the Industrial Commission will stand firm," said Wayde Schafer, a spokesman for the Sierra Club's North Dakota chapter.

The NDIC in June 2014 imposed four increasingly tighter tranches for how much gas can be burned off.

The state's oil companies flared 20 percent of the natural gas they produced in July, the latest month for which data are available. That went beyond current standards to flare no more than 23 percent.

The standards tighten to 15 percent in January, a goal the industry says is untenable.

"Just like any road construction project, we've had unanticipated delays that are frankly no fault of the producers," said Ron Ness, president of the North Dakota Petroleum Council, an industry trade group.

Ness said a Byzantine web of federal oversight impedes construction of pipelines necessary to connect wells with processing facilities. Oil can be stored in tanks indefinitely, but natural gas must be piped away after extraction.

Oneok's decision to cancel its Lost Creek pipeline and delays in federal approval for Hess Corp's Hawkeye pipeline dashed hopes the January standards could be met, Ness said.

Oil producers want two extra years to comply with the rules. Lynn Helms, who advises the NDIC as head of the state's Department of Mineral Resources, recommends a 10-month extension. Goehring, the NDIC commissioner, said he does not have a preferred timeline.