December 15, 2017
ND Oil Production Still Climbing

North Dakota oil production continued its steady increase in the month of October, increasing about 80,000 barrels per day above September numbers.

Preliminary figures show the state's producers averaged 1,185,499 bbl/day, compared to 1,107,345 in September. Oil companies completed 70 new wells during the month.

North Dakota producers set another new record for natural gas production, now topping more than 2 billion cubic feet per day. Total natural gas production for the month of October was just under 64 Bcf.

The October Bakken natural gas capture rate was 85%, with the daily volume of gas flared from September to October up 19 Mcf/day. The highest flared percentage was 36% in September 2011.

Click here to read the Director's Cut.
Industrial Commission Goes After Flaring

With North Dakota oil producers barely meeting targets to reduce flaring of natural gas associated with production, the ND Industrial Commission is stepping up efforts to deal with the problem.

Rules developed by the state Department of Mineral Resources now require producers to capture 85% of natural gas produced at an oil well. The target will increase to 88% on November 1, 2018, and 91 percent on November 1, 2020.

DMR Director Lynn Helms told Industrial Commission members that a lot of gas flaring occurs on the Ft. Berthold Reservation, where just 69% of gas is being captured. Helms said it’s happening because it’s difficult for producers to obtain right-of-way to install gathering pipelines. He said securing ROW is a lengthy process that requires approval from the Bureau of Indian Affairs.

Gov. Doug Burgum suggested it would be better if BIA would delegate its authority to the MHA Nation Tribal Council. Burgum planned to discuss the issue at today’s meeting of the interim Tribal Taxation Issues Committee in New Town. The proposal would require approval of the Department of Interior.

NDIC members also suggested there’s a need to update the 2012 Bentek study of the potential for future natural gas production. Gov. Burgum said it’s important to call attention to the state's growing gas production to attract investment capital to build new pipeline capacity or develop other ways to use the gas in North Dakota.
Committee Looks Into Wind Energy Impacts

Wind farms may produce “clean energy,” but there are still impacts to landowners, and to people who would prefer an unobstructed view.

The ND Legislature’s interim Natural Resources Committee heard three hours of testimony yesterday to learn more about impacts of wind energy development. PSC Commissioner Julie Fedorchak told the committee North Dakota now has 3,000 megawatts of installed wind capacity, with more wind farms on the drawing board. Fedorchak said 2.3 megawatt hours of wind energy was consumed in North Dakota last year, and another 5.3 Mwh was exported out of state.

Much of the testimony focused on the blinking lights on wind towers. The 2017 Legislature approved HB 1378, which requires new wind facilities to be equipped with “light mitigating technology.” That could be an aircraft detection system that turns lights on only when an aircraft is approaching a wind farm, or a system that dims lights when weather is clear, and brightens lights if visibility is poor.

Legislators were told wind farms can cause hard feelings among adjoining landowners if one receives income from an easement, while a neighboring landowner does not. ND Farmers Union lobbyist Kayla Pulvermacher told legislators that unitization of wind farms may help solve that. She described how a group of landowners in the Valley City area aggregated 30,000 acres of land to offer to prospective wind developers. 

Wind farm permitting remains a local decision. Unlike other types of energy projects in North Dakota, wind farms must secure a local conditional use permit, as well as a siting permit from the PSC.

Click here to see the committee’s agenda with links to presentation materials.
WDEA Education Committee Looks at School Finance

Members of the Western Dakota Energy Association’s Education Committee got together in Williston this morning to discuss possible changes to the in-lieu-of property tax revenue application in the state Foundation Aid formula.

WDEA Executive Committee member Steve Holen, who chairs the committee, organized the meeting to develop the association’s response to an interim legislative study of education funding. Holen said committee members heard a presentation from Senator David Rust, R-Tioga, a former school superintendent who is a member of the legislature's Education Funding Committee. 

School districts in the oil-producing region receive an allocation of oil tax revenue through the gross production tax (GPT) distribution formula. But the in-lieu-of property tax revenues are imputed (75% of the amount is deducted) from the district’s Foundation Aid payment. Among other things, Senator Rust is proposing to eliminate the deduction if GPT funds are used for non-general fund expenditures.

Holen intends to share details of the committee’s work with other school superintendents around the state at a meeting in Jamestown next week. He said the chairman of the Education Funding Committee, Senator Don Schaible of Mott, will also be at that meeting to hear the group’s discussion. The next meeting of the interim committee is tentatively scheduled for January 25 in Bismarck.
DPI Cuts Rapid Enrollment Grants to Schools

North Dakota's population is growing so rapidly in some communities, the state Department of Public Instruction has had to reduce rapid enrollment grants more than 40 percent.

The grants are available to K-12 schools that see enrollment numbers grow more than two percent. This year a total of 24 school districts were eligible for grants, most of which were in western North Dakota. The list includes Williston, Dickinson, McKenzie County, Alexander, Nedrose (Minot area), Killdeer, New Town, South Heart, Williams County, Nesson (Ray), Divide County, Belfield, New England, Eight Mile (Trenton) and Stanley.

Schools that qualified were supposed to receive $4,000 for every extra student. But the ND Legislature only budgeted $3 million annually, which wasn't enough to pay the bill. So all grants will be reduced 41 percent, leaving the districts with $2,350 per additional student.

Click here to see the list of eligible districts and amounts they received.

Click here for an article in the Williston Herald.
Hoeven, Cramer Dismiss Talk of Royalty Cuts

North Dakota's Republican members of Congress are downplaying reports that the state and oil-producing counties will lose federal mineral royalties due to the current tax reform bill.

North Dakota counties receive about $30 million a year in federal mineral royalties, and another $30 million goes to the state. The federal Pay-As-You-Go Act of 2010 requires that any new legislation passed by Congress must pay for itself. And because the tax bill would reduce federal revenues, it's been suggested PayGo would kick in and the royalty payments would be cut.

Senator John Hoeven said the report is just a scare tactic to defeat the bill. He said the PayGo rules would not apply unless Democrats vote for the cuts, which they have not previously done.

Fellow Republican, Rep. Kevin Cramer, said a statutory Pay-Go sequester has never happened and will not happen as part of the tax bill.

Click here to read more from the Dickinson Press.
New Survey of Williston Basin Oil Resource Planned

The U.S. Geological Survey (USGS) agreed this week it's time to conduct another comprehensive review of the amount of recoverable oil and gas from the Williston Basin.

The next scheduled review was to be in 2020, but congressional and energy officials have urged the USGS to do the survey sooner. When USGS finished a similar assessment four years ago, it turned up a potential of 7.4 billion barrels of recoverable oil, twice as much as was previously estimated.

Click here for Renee Jean's Williston Herald story.

Click here for Senator Hoeven's announcement of the news.

Click here for Prairie Public Broadcasting audio of ND Petroleum Council's Ron Ness' reaction.
Enbridge Pipelines Nearing Capacity

Enbridge is warning producers that its network of oil pipelines is reaching maximum capacity. The announcement coincided with a sharp drop in prices paid for heavy crude produced in Canada.

Guy Jarvis, Enbridge executive vice-president, liquids pipelines and major projects, said his company’s oil pipeline network is reaching maximum capacity and would remain full even if competing oil pipelines were built in the near term. In a slide titled Enbridge System Likely to be at Maximum Capacity, the company said its system is expected to be at or near capacity through 2021.

Read the story here.

Permian production expected to exceed pipeline capacity

An oil industry analyst is warning Texas oil producers that a shortage of pipeline capacity may soon lead to reductions in the price they receive for oil.

Sandy Fielden, director of oil and products research at Morningstar, said producers in the Permian Basin should brace themselves for a price squeeze in 2018 as production growth continues to outstrip takeaway capacity additions. Permian Basin production has grown by 419,000 barrels a day, to 2.6 million barrels a day, and Morningstar estimates Permian production will double again by 2020, to 5.3 million barrels a day, overtaking pipeline capacity by mid-2018.

Click here to read more from the Midland Reporter-Telegram.
Multi-state Transportation Group
Focuses on North Dakota Shippers

The Williston-based Great Northern Corridor Coalition will meet in Seattle early next year to shape its strategic plan. 

Executive Director Curtis Shuck said the coalition has been meeting with state departments of transportation to develop a list of initiatives to prioritize.

With North Dakota Agriculture Commissioner Doug Goehring on the three-member Executive Board, the state takes a leadership role.  Shuck said ultimately it means North Dakota shippers will have greater access to markets, whether they are selling or buying commodities.

Click here to read more about the Great Northern Corridor Coalition.
Be Aware of Distracted Driving Laws

The Upper Great Plains Transportation Institute and North Dakota Local Technical Assistance Program remind drivers of ways they can be distracted and cause crashes.

They point out there are three types of distractions:

1. Manual: taking your hands off the wheel

2. Visual: taking your eyes off the road

3. Cognitive: taking your mind off driving

Because texting requires visual, manual and cognitive attention from the driver, it is by far the most dangerous distraction.

Law changes effective August 1 in North Dakota state that “distracted driving” is any activity that impairs a driver’s ability to operate a vehicle. Fines have been increased to $100 (higher for drivers under the age of 18).
Quick Connect

  • Refined coal is 20% of coal-fired power generation -- EIA

  • US shale recovery leaves OPEC with a difficult 2018 -- CNBC

  • Hoses an efficient way to move water to hydraulic fracturing sites -- KX News

Factoid of the Week

Facilities that need a North Dakota siting permit:
  • Generation of 50 MW of electricity
  • Refinement of 100 mcf or more of gas/day
  • Refinement of 50,000 bbl per day of liquid hydrocarbon
  • Gas or liquid transmission pipeline
  • Water line to or from an energy conversion facility
  • 115kv or higher electric transmission line more than one mile

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Oil prices and rig count

December 15, 2017

WTI Crude: $57.31
Brent Crude: $63.30
Natural Gas: $2.61

       North Dakota Active Rigs: 53 (unch)      12/15/16 -- 40 rigs
Geoff Simon
Editor/Executive Director

Mike Kopp, Editor
Mike Kopp, Mykuhls Photography, Photographs