BISMARCK, N.D. — North Dakota regulators on Tuesday relaxed some rules and offered incentives they hope will further limit natural gas that’s being burned off at well sites and wasted as a byproduct of crude production.
The state Industrial Commission, a three-member panel led Gov. Doug Burgum, unanimously approved the changes that were submitted by an industry group.
The amended rules extend credits from three months to six months for companies that meet or exceed flaring goals. It also gives companies credit if the natural gas is used in the state to power equipment or facilities, and allows companies that are meeting targets to forgo a capturing plan with their drilling permits.
Director of Mineral Resources Lynn Helms said the latter incentive would “relieve the administrative burden” for companies meeting targets while allowing regulators to focus more on those that don’t.
“We will reward you if you are doing well,” Helms said. “We will take you to the woodshed … if you’re not doing well.”
Attorney General Wayne Stenehjem, who sits on the regulator panel, said he was “pleased” the industry did not request that those goals be adjusted.
The rules that were first adopted by the state and endorsed by the industry in 2014 required oil companies to capture 85 percent of the gas by 2016, and 90 percent by 2020. They came after more than a third of the gas went up in smoke, drawing criticism from environmentalists and many residents who said the state was losing revenue from the wasted gas, and that it contributed to unnecessary carbon dioxide emissions.
Companies are required to capture 88 percent of the gas by Nov. 1.
Kari Cutting, vice president of the North Dakota Petroleum Council, said in an interview that the oil industry is committed to meeting the flaring targets, even if it means cutting back on crude production.
“We’ll do what we have to do,” she said.
The rules that went into effect four years ago allow regulators to set production limits on oil companies if the targets aren’t met. Companies that fail to meet the goals could face fines and have production at a well limited to as little as 100 barrels a day, depending on the amount of gas flared.
The amended rules allow companies drilling outside of the core areas of western North Dakota’s oil patch to drill multiple wells for up to a year without capturing the gas. Helms said the goal is to “demonstrate the potential” of an area to attract investment and infrastructure.
The state’s gas-gathering and processing capability is 2.1 billion cubic feet (0.06 billion cubic meters) daily, said Justin Kringstad, director of the North Dakota Pipeline Authority. At least $3 billion in natural gas-related projects is scheduled to come on line within the next two years, boosting gas-gathering and processing capability by 38 percent, he said.