Dalrymple: State has been ‘easy on companies’ for flaring, but adds: ‘Those days are over’
BISMARCK -- North Dakota Gov. Jack Dalrymple made some of his strongest public comments yet to industry about flaring in a speech Wednesday at the Williston Basin Petroleum Conference.
Regulators and industry are using the conference -- which is occurring just over a week before new flaring reduction measures take effect June 1 -- to cement the message to oil companies that the new rules are to be taken seriously.
Dalrymple even admitted being lax on industry in the past in his speech, saying “those days are over” of regulators giving companies leeway after the one year of free flaring has expired.
“We have been easy on companies, I think, up until this time that are arriving on their one-year anniversary,” he said. “We have, at times, given them a bit more time to get a well connected. … We’re not gonna do that anymore.”
Regulators’ goal with the new rules is to cut flaring to 10 percent. Currently, 33 percent of gas is flared off as oil is worth more and the infrastructure to gather and process the gas is lacking.
Effective June 1, all applications for a permit to drill must come with a gas capture plan, including plans for hooking up to a gas line. The new rules are largely adapted from recommendations made in January by a North Dakota Petroleum Council task force on flaring.
In his own remarks Wednesday, Department of Mineral Resources Director Lynn Helms said that for the rest of 2014, getting gas capture plans in place is “going to be a huge focus for us.”
Helms’ department also sent a letter to operators reminding them of the penalties for not following the new regulations. Sent May 9, the letter reminded operators that failure to abide by the new rules could result in penalties, including restrictions on production.
“All of this is part of the natural growth and maturation, I think, of an oil boom. This is not something that people in the industry have not seen before,” Dalrymple said. “We are a state that has encouraged oil and gas production. But we are not known as a state that is lax or in any way soft on regulation. North Dakota does not have soft regulations.”
The gas capture plan requirements, when discussed among the Petroleum Council task force, were contentious among industry players, EOG Resources’ Eric Dille, the task force chair, said in a previous interview.
“Some companies think that goes too far and that really we don’t need to do that,” he said.
Industry and regulators have pointed to the Hess Corp. Tioga gas plant expansion as an example of industry working to reduce flaring. On Monday, the company officially reopened its newly expanded processing plant, which can now process more than twice the natural gas as it could before.
The expansion has been used by regulators and industry alike as an example of industry working to reduce flaring -- this project will cut flaring on Hess sites by about half, Dalrymple said Wednesday.
Dustin de Yong, from the Montana Department of Commerce, said in remarks at the conference that since two years ago, the last time the Williston Basin Petroleum Conference was held in Bismarck, the conversation on flaring has shifted.
“This year we’re not talking about the problem,” he said. “We’re talking about the solutions.”