- Associated Press - Wednesday, January 29, 2014

BISMARCK, N.D. (AP) - A group representing hundreds of companies working in North Dakota’s oil patch told state regulators on Wednesday that the industry plans to significantly decrease the amount of natural gas being burned off and wasted as a byproduct of oil production.

The North Dakota Petroleum Council’s flaring task force told the Industrial Commission that at least $1.7 billion more will be invested over the next two years into building gas pipelines and other infrastructure. It expects the industry to be capturing 85 percent of the gas by 2016, and 90 percent within six years.

“We think that’s achievable,” Eric Dille, the task force’s co-chairman, told The Associated Press.

North Dakota drillers currently burn off, or flare, about 30 percent of the valuable gas - compared to the national average of less than 1 percent - because development of gas pipelines and processing facilities haven’t kept pace with oil drilling. The state’s oil production has nearly doubled since 2012.

Dill said the expected reduction in flared natural gas will also come from additional self-imposed steps by the industry, such as submitting plans for natural gas gathering before applying for a drilling permit. He noted that the industry has already invested more than $6 billion in infrastructure to capture natural gas in the past six years.

Still, records show that about 300 million cubic feet of natural gas goes up in smoke each day in North Dakota. That’s enough to heat more than 1 million homes daily. Flaring also accounts for about 5 million tons of carbon dioxide emissions.

Dille, also the government affairs manager for Houston-based EOG Resources Inc., said the task force - made up of 35 industry representatives - has met more than 20 times since September to develop a plan.

Wayde Schafer, a North Dakota spokesman for the Sierra Club and an outspoken critic of natural gas flaring, applauded the plan.

“I commend the industry,” he said. “It’s better late than never.”

The percentage of flared natural gas in North Dakota has remained at about one-third of production in recent years, though the overall volume has dramatically increased.

Gov. Jack Dalrymple said the goals outlined by the task force were “very encouraging.” Dalrymple is chairman of the Industrial Commission, which regulates North Dakota’s oil and gas industry; Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring are its other members.

The governor said he supports the idea of submitting a gas-gathering plan at the same time as an oil drilling permit.

“Best practices say we really ought not to be drilling new wells until we really know where that gas is going to go,” Dalrymple told the AP.

North Dakota oil producers can flare natural gas for a year without paying taxes or royalties on it. Companies can then ask state regulators for an extension because of the high costs of moving the gas to market. More than 95 percent of the extensions requested in recent years were granted, records show.

North Dakota mineral owners in October filed lawsuits seeking damages from oil drilling companies for natural gas that is lost when it is burned instead of being captured as a byproduct of oil production. The lawsuits, which seek class-action status, argue the mineral owners have lost millions of dollars in royalties because oil drilling companies are wasting natural gas.

Derrick Braaten, a Bismarck lawyer representing mineral rights owners, said the lawsuits could come before a judge this spring.

Braaten called the industry’s goal to capture more natural gas encouraging.

“I think it’s great news and great to hear but if they are able to be this aggressive now, I wonder why they couldn’t be this aggressive several years ago,” Braaten said.

Dille and Ron Ness, president of the Bismarck-based industry trade group, said obtaining right-of-way easements from landowners has been the biggest hurdle in getting pipelines placed to gather natural gas.

The group recommended that the state review potential legislation to improve right-of-way access.

Dille said the industry ultimately could capture up to 95 percent of the state’s natural gas.

“To get to 95 percent we’re really going to need the help of everyone involved,” he said.

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