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ND panel takes input on measures to reduce natural gas flaring

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BISMARCK -- As a doctor who majored in chemistry, Lyle Best said he can't help but wonder about the potential health effects of the plumes of flame and large clouds of black smoke that frequently belch from two oil well flares about 200 yards upwind of his house near Watford City.

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He said he and his wife, Susan, don't pretend there's a simple answer to North Dakota's problem of flaring natural gas, but they have a few suggestions.

"No. 1 is slow down," he testified Tuesday during a public hearing in Bismarck on the state's proposed measures to reduce flaring.

Oil industry representatives warned that imposing broad limits on drilling permits and production as a means to curb flaring is unnecessary and could force oil companies and third-party investors to think twice about doing business in North Dakota's Bakken and Three Forks oil formations.

"It may cause an adjustment to our oil and gas development strategy in the Bakken," said Ralph Castille, a petroleum engineer with ConocoPhillips.

An overflow crowd of more than 70 people attended Tuesday's daylong hearing at the Department of Mineral Resources. About 20 people were expected to testify in front of a department panel that will consider the input as it prepares revised flaring rules for the North Dakota Industrial Commission to consider.

Under increasing pressure from landowners and environmentalists, the Industrial Commission adopted several steps in March aimed at curbing natural gas flaring, including requiring gas capture plans for all drilling permit applications after June 1.

North Dakota burned off 36 percent of its natural gas - nearly 11 billion cubic feet - in February, considerably higher than the national average of less than 1 percent.

An industry task force organized in September by the North Dakota Petroleum Council said its proposals could reduce flaring to 15 percent by 2016 and 10 percent by 2020.

"We actually want to sell every molecule of gas," Castille said. "We're losing money when we flare."

Department of Mineral Resources Director Lynn Helms said earlier this month that the new flaring rules could reduce North Dakota oil production by 15,000 to 30,000 barrels per day and that some curtailment of oil production will be necessary to curb flar-ing and encourage opera-tors to more quickly implement gas gathering systems.

But industry officials Tuesday resisted the idea of curtailing production, cautioning that it could discourage oil and gas development and result in less tax revenue for North Dakota, which has collected billions from the industry on its way to becoming the No. 2 oil-producing state behind Texas.

"We've got to let the gas capture plan work," said Brad Aman, vice president of northern region production for Continental Resources, the largest mineral rights leaseholder in the Bakken shale oil play.

The state must give indi-vidual companies flexibility to meet flaring targets, Aman said, calling the gas capture plan a powerful new regulatory tool that "will allow you to reach in and touch the bad apple on the shoulder without making blanket rules and regu-lations, because that's what we don't want."

Theodora Bird Bear of the Dakota Resource Council, whose members include landowners, farmers, ranchers and mineral owners, acknowledged the industry is generating a lot of revenue for the state.

"But there's going to be a lot costs ... to the public if this is not done right," said Bird Bear, who chairs the organization's oil and gas task force.

Bird Bear, a mineral owner from Mandaree on the Fort Berthold Reservation, testified that flaring should only be allowed in emergency situations, for well purging and evaluation and during production testing.

She also urged the state to eliminate the flaring exemption standard, which she said is "open to interpretation by a wide range of folks," and to restrict production if there are known impacts to ambient air quality. The state Department of Health needs to survey people living near oil wells, she said, adding there's been "no examination" of flaring's health impacts.

"We don't want to have to see the air we're breathing," she said.

Best, the physician, said flames shoot at least 20 feet high from the two flares that have burned near his home since the wells were completed about a year ago, describing the sound as "constant and similar to a jetliner passing nearby."

He said North Dakota should be willing to model its governance of oil development after other states with more effective regulations. North Dakota cur-rently allows wells to flare for up to one year, after which they must be con-nected to a gas-gathering system, granted an exemp-tion or pay taxes and royal-ties on the flared gas.

"It seems clear that much of North Dakota's currently lax regulation is unenforced," Best said. "Let's not let our state define the lowest common denominator for responsible oil (and) gas development."

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