August 2014, Vol. 241, No. 8

Editor's Notebook

Editor's Notebook: North Dakota Making News

I’ve never been to North Dakota; in fact, I don’t think I’ve ever met anyone from that state. Now, one of the great oil discoveries of recent years, the immense Bakken Shale, has put the upper Plains state on the map for all to see.

The problem is that not all you see or hear about is so wonderful, unless you’re a multibillion-dollar oilman. Every day those 1 million or so barrels of oil are produced keeps the cash register singing a happy tune for the producers, leaseholders, local businesses and the state coffers.

Progress often comes with a price and such is the case of the Bakken. Let’s start off with gas flaring. While the gas industry touts the wonders of this cleanest of fossil fuels, pipeline construction in North Dakota has been slow. The terrain is difficult; historically there was never a need for gas infrastructure nor was the Bakken expected to yield so much gas.

North Dakota is a red state, just like Texas, which means a very friendly business climate for producers and others with money to invest. Bring in those bucks and ask questions later. They’re not going to hold up permitting until infrastructure is in place. It’s understandable to a point. The country was in the midst of the Great Recession when the oil boom started and states with the petroleum resources like North Dakota, Texas, Louisiana and Pennsylvania would have been foolish to turn away those large-dollar investments. North Dakota decided it was more important to produce oil quickly than take the time to build the necessary infrastructure to handle the gas.

Whether they had to give away the store is a question that some officials and residents are asking, like whether flaring off all of that gas is worth the release of climate-changing greenhouse gases equal to 1 million cars, as the Times noted. There has been some pipeline construction, enough to stretch from Los Angeles to Miami and back twice, but the number of wells not connected to a pipeline has doubled and about 1,000 wells are not connected to processing plants, the article says. Still, the amount of gas flared in the Bakken has nearly tripled since 2011, wasting over $1 billion annually.

Producers are not real big fans of pipelines when they have alternatives like shipping oil via rail’s inadequate tanker cars or, in the case of gas, burning it off when the value of their oil is more than 20 times that of gas. These are cash-hungry businesses with lots of immediate expenses so they prefer not to invest huge amounts of money in a pipeline that can only go from Point A to Point B, and for which they will see no financial return for several years.

Some North Dakota officials have heard enough. Gov. Jack Dalrymple, a Republican, told the Times he is “embarrassed” by the state’s gas flaring record and promises that new rules that took effect in June will be strictly enforced. The regulations are designed to reduce total gas flaring from 28% in May to 10% in 2020. New oil well permits will require detailed plans for capturing gas.

Then we come to the huge wastewater spill discovered on July 8. A pipeline operated by Arrow Pipeline LLC, a subsidiary of Houston-based Crestwood Midstream Partners, leaked 1 million gallons of fracking wastewater or brine several days earlier. There were early fears that the saltwater could threaten water sources for nearby reservations. Beaver dams are being credited for keeping the mess from spreading, enabling it be absorbed into the local soil, said the Environmental Protection Agency. Crestwood has quickly grown into one of the nation’s largest independent oil and gas producers. Bob Phillips runs the company and he has a reputation for getting things done the right way.

These types of leaks are not foreign to North Dakota. Because they occur in rural areas they usually don’t receive much media attention, although last year 74 such leaks spilled 22,000 barrels of saltwater. Officials started paying attention and a bill was introduced into the Legislature that would have required flow meters and cutoff switches on waste-disposal pipelines. (The Arrow pipeline had no system alert and the leak was only detected from production loss reports.) The energy industry of course protested and, surprise, the measure was defeated by an 86-4 vote.

Is there a bright side here? Maybe. Lynn Helms is the director of mineral resources for the state and he seems determined to set a new course for energy development. Whether he can withstand industry and political pressure will be the big question.

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