March 8, 2019 -- Front Row Seat!
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More than 300 people attended Energy Day at the Capitol this week including Gov. Burgum. Look for him in the front row listening to Williston Economic Development's Shawn Wenko.
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Prairie Dog Bill Moving through Senate
Appropriations Committee Hearing on Monday
Legislation that distributes oil tax revenue to western North Dakota communities impacted by energy development took another step closer to final passage this week.
The Senate Finance and Taxation Committee gave a Do- Pass recommendation to
HB 1066, and it has been re-referred to the Senate Appropriations Committee which is scheduled to hear the bill Monday afternoon. It previously passed the House on a vote of 80-12.
The bill has been dubbed Operation Prairie Dog by its primary author, Senate Majority Leader Rich Wardner of Dickinson. It got its name because the bill would also establish infrastructure “buckets” for non-oil cities, counties and townships, and the little rodents are good at building infrastructure. In his pitch to the committee, Wardner addressed questions from critics who’ve wondered when “enough is enough” funding for the Hub Cities of Dickinson, Minot and Williston.
Click
here to listen to Wardner’s comments.
Wardner said taxes paid by the oil industry support a lot of state services, so it’s important the legislature continue to invest in the communities that support the industry.
Click
here to listen to Wardner’s comments.
Nearly a dozen people representing North Dakota businesses and local governments testified in support of the bill. Mountrail County Commissioner Trudy Ruland, a member of WDEA’s Executive Committee, pointed out unlike previous legislation to fund oil-impacted communities, the Prairie Dog bill does not contain a sunset clause.
Click
here to listen to Ruland’s comments.
Ruland said funding certainty is especially important because counties are collaborating with oil companies to more closely align road projects with the industry’s drilling plans.
Others who testified in support of the bill described the need for the infrastructure funding that it would provide. Click
here to see projected city payouts in non-oil regions, and
here to see county amounts.
Click
here for an article from the Williston Herald on this week's progress on the legislation.
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Legislature Hears More on Pore Space
A four-member House Energy and Natural Resources subcommittee heard more than two hours of additional testimony this week on a bill that has raised concern among landowners about their rights to the pore space below their land.
The controversy developed last week during a hearing on
SB 2344, a bill aimed at facilitating the temporary storage of produced natural gas. The legislation contains a definition for land that excludes pore space, a provision which landowner rights groups have referred to as a “takings.”
The ND Industrial Commission recently received results of a
study which shows it may be economically feasible to temporarily store produced natural gas underground as an alternative to flaring. But because the study showed that not all of the gas would be recovered, mineral owners who testified this week questioned if they would be compensated for the value of the gas that is lost.
Saltwater disposal wells that inject produced water into underground pore space are also part of the discussion. Surface owners have said they should be compensated for use of pore space because water injected by a well on neighboring property likely migrates into spore space under their land. However, testimony by McKenzie County landowner Nathan Brenna suggests that may not be necessary because the Dakota sandstone formation that is being used for disposal can take a lot of water.
“I’ve yet to see an example where the adjacent surface owner can’t use his or her pore just because of the existence of a surface well injecting water in another location,” Brenna said.
The Northwest Landowners Association is lobbying to defeat the bill, instead recommending the issue be examined in an interim legislative study. NWLA Chairman Troy Coons said his association supports the idea of using temporary storage of gas to reduce flaring and the use of CO2 in enhanced oil recovery, but the way in which the bill deals with the pore space issue is “extremely concerning.” Click
here to see a document outlining NWLA concerns with the bill.
The subcommittee is scheduled to meet again Monday, March 11, at 10 a.m. in the Coteau A Room at the Capitol.
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Senate Recommends Historic Site Study
A resolution seeking an interim legislative study to identify and preserve historic and sacred Native American sites passed the Senate this week on a 27-18 vote despite a do-not-pass recommendation from the Senate Energy and Natural Resources Committee.
SCR 4017 will now move to the House for its consideration.
The sponsor of the resolution, Senate Minority Leader Joan Heckaman, D-New Rockford, said a study is needed to coordinate activities between the various state and federal agencies and the tribes. Heckaman said areas sacred to Native people are not always obvious to other observers.
Click
here to listen to Heckaman's comments.
Sen. Jessica Unruh, R-Beulah, who chairs the committee that urged defeat of the resolution, said adequate systems are already in place to preserve historic and sacred Native American sites.
Click
here for Sen. Unruh’s comments.
In addition to her legislative role, Unruh is environmental manager at the Coyote Creek Mining Co.
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Primary Seat Belt Law Unbuckled in House
A bill to put more teeth into the state’s mandatory seat belt law was defeated in the ND House this week by a vote of 54-38.
The legislation,
SB 2060, would have allowed police officers to pull over drivers not wearing seat belts and increased fines from $20 to $50. It would also have required adults to wear seat belts in both the front and back seats of a vehicle.
The law on the books now requires law enforcement to have another reason to stop a driver. The primary seat belt enforcement measure had a spirited and personal discussion on the House floor involving safety concerns on one side and preservation of personal freedom on the other.
Rep. Pat Heinert, R-Bismarck, former sheriff of Burleigh County, spoke about the loss of his high school friend in an automobile accident. Click
here for his comments from the House Floor Session.
A certified firefighter and fire department captain, Rep. Ron Guggisberg, D-Fargo, talked about unintended consequences of an individual’s personal choice. Click
here for Guggisberg's comments.
Rep. Mark Owens, R-Grand Forks, said because law officers can spot unbelted drivers, stopping that vehicle could result in the prevention of an alcohol-related crash.
Click
here to listen to Owens' comments.
Rejecting the personal freedom argument, Owens said it is the legislature’s duty to instruct society for the greater good. Click
here to listen to Owens' comments.
Click
here for an article about the House vote from the Fargo Forum.
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Resolution Seeks Study of Royalty Deductions
The House Finance and Taxation Committee has begrudgingly given a Do-Pass recommendation to a resolution that seeks a legislative study of post-production royalty deductions.
The committee voted 9-5 to approve
SCR 4010, but only after two previous votes ended in a tie. The measure asks that the legislature consider a study to answer concerns from mineral owners regarding deductions from their royalty payments. Committee members who opposed the resolution questioned whether the state should insert itself into private contractual relationships.
The sponsor of the resolution, Senator Brad Bekkedahl, R-Williston, said royalty deductions are typically associated with the cost of production, but recent deductions related to efforts to reduce flaring have raised new questions for mineral owners.
Click
here to listen to Bekkedahl’s comments.
If the measure is approved by the full House, it will be up to legislative management to decide if it will pursue the study. The resolution specifies that the study include “consideration of the methods used to calculate the value of oil and gas, the point of sale used to determine the value, oil and gas sales in the absence of an arm's-length contract, any deductions or incentives applied to the value, and the methods used to report any deductions or incentives on mineral royalty statements.”
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Airport Managers Support Aeronautics Bill
Airport managers from Dickinson and Watford City urged the Senate Appropriations Committee this week to provide funding to support airport improvement projects in their communities.
Kelly Braun, manager of the Theodore Roosevelt Regional Airport in Dickinson, asked the committee to add $22 million to the $5 million currently provided in
SB 1006, the budget bill for the North Dakota Aeronautics Commission. Braun said that would provide a total one-time appropriation of $27 million for airport infrastructure, including work at the Dickinson airport. He said the existing runway is 6,400 feet long, 100 feet wide and has a weight-bearing capacity of 37,000 pounds, but growth in air traffic and the use of larger planes requires that it be upgraded.
“To meet current and future demands will require the runway to be extended to 7,300 feet by 150 feet with a weight-bearing capacity of 90,000 pounds,” Braun said. “It will also require that the runway be shifted 1,700 feet to the northwest to bring safety areas and object free areas into federal compliance.”
The committee also heard from Luke Taylor, Watford City Municipal Airport manager, about the need to upgrade its capacity to handle air traffic. Taylor said the airport not only provides the infrastructure for local air ambulance services and aerial applicators, its use has expanded with growth in the Bakken.
“The airport has experienced increases in all kinds of operations including business jets, air taxi, pipeline patrols, flight training and tourism,” he said.
Taylor said the Watford City airport has added a general aviation apron where airplanes park, as well as a new terminal building and 15 private hangars to house the growing number of business jets and single engine aircraft that use the airport. He said plans are being completed to lengthen the existing 4,400 foot runway to accommodate future needs.
Click
here for additional information about airports on the ND Aeronautics Commission web site.
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High Profile Bills to be Heard Next Week
Several significant pieces of legislation that have made it through one house of the ND Legislature will have their first hearing next week before committees in the other house.
In addition to hearings on the pore space issue and the Prairie Dog bill described in this newsletter, a hearing is scheduled next Tuesday in the House Appropriations Committee on
SB 2275, which has been referred to as Prairie Dog III. The legislation, sponsored by Senator Rich Wardner, R-Dickinson, would establish an essential infrastructure revolving loan fund. Eligible projects mirror those in
HB 1066 (the Prairie Dog bill), and also include flood control and water supply projects, as well as infrastructure projects on college campuses. The bill would establish a low interest loan pool of up to $500 million by leveraging earnings from the Legacy Fund. The hearing on SB 2275 will be held Tuesday at 8:15 a.m. in the Roughrider Room.
Competing House and Senate bills related to passage of the ethics measure are also scheduled to occur next Tuesday. Special House and Senate Ethics Committees will hear the bills. The House committee will hear
SB 2148 at 2:15 p.m. in the Pioneer Room, to be followed by a Senate hearing on
HB 1521 in the same room at 3:45 pm.
The Senate Appropriations Committee has scheduled a hearing Wednesday, March 13, at 2:30 p.m. on a proposal in the Commerce Department budget (
HB 1018) for the Theodore Roosevelt Presidential Library. The version passed by the House does not contain any money for the library, which was requested by Gov. Burgum in his budget proposal. The hearing will be held in the Harvest Room.
HB 1435, the SIRN 2020 bill to fund a statewide radio network for emergency responders, is scheduled to be heard next Thursday by the Senate Government and Veterans Affairs Committee. The hearing will begin at 10:00 a.m. in the Sheyenne River Room at the Capitol.
Click
here to see a complete list of next week's committee hearings on the bills that WDEA is tracking.
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Oil and Gas: An Economic Powerhouse
In 2017, the petroleum industry had a $32.6 billion impact on North Dakota’s economy. That number is up by $8 billion from 2016 but down from the peak of $43.6 billion in 2013.
Attendees at the ND Petroleum Council’s “EnergyNDDay” heard these statistics from Dean Bangsund, a research scientist from North Dakota State University as he reported on the seventh such study NDSU has completed.
Even though the industry witnessed a substantial contraction in 2015 and 2016, Bangund says it remains a substantial component of North Dakota’s economy comprising 15 to 25 percent of business volume.
Click
here to listen to Bangsund’s comments.
Bangsund said a shift is coming as the industry matures with more long-term jobs to maintain production and provide transportation and processing. In 2015, numbers of temporary and long-term workers were about equal but since then long-term workers became the largest sector.
“Don’t expect to see the type of meteoric rise when they were expanding in shale development,” Bangsund said. “They need less labor now to do the same amount of output from just a few years ago.” But, he asserted industry job creation still matches or exceeds what he sees in other parts of the state.
Click
here for Bangsund’s comments.
Click
here for a one-page summary document of the economic impacts. Click
here for an article on the study from the Bismarck Tribune.
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Geopolitical Implications of the Bakken
North Dakota legislative decisions on both the state and county level regarding policy, taxation, and regulations on the oil and gas industry have major geopolitical consequences. According the Blu Hulsey, it's something that people don’t talk about enough in the state.
Hulsey is senior vice president of government relations and regulatory affairs at Continental Resources and also the current board chairman of the ND Petroleum Council. He told the attendees at the NDPC-sponsored “EnergyNDDay” how decisions from statewide leaders have an effect all across the globe.
“The decisions made in the tax committee along with the decisions made on county roads and county infrastructure matter,” he said. “When you see Iran sanctions and the (Trump) administration saying we’re not going to let you import Venezuelan heavy crude into our country; why does this happen? It happens because of what’s going on right here in North Dakota,” Hulsey said.
Click
here for more of his comments.
Continental Resources is the largest oil producer in North Dakota and last fall doubled its own oil recovery estimates claiming that as much as 40 million barrels of crude may ultimately be produced from the play. In addition, the company estimates it recovers 15 to 20 percent of the oil which is a vast improvement from the beginning of development when the industry was recovering around 3 to 5 percent. Hulsey said the company has reduced the time to drill a well from 33 days to about 12 days, an example of how efficient the play has become with advancing technologies.
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Write it Down!
WDEA Annual Meeting
Get this on your calendar! The Annual Meeting of the Western Dakota Energy Association will be held:
October 30 - 31, 2019
Grand Hotel
Minot, ND
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Quick Connect
- Capitol notebook: Updated revenue forecast early next week -- Fargo Forum
- Public hearing scheduled over potential tax misallocation -- Fargo Forum
- Williston leaders to address residential housing shortage issue -- KFYR-TV
- How $115 million bond for Dickinson High School would impact your taxes -- Dickinson Press
- Legislators propose tapping into Legacy Fund to eliminate future state income tax -- KXMB-TV
- Lawmakers approve resolutions raising the bar on constitutional amendments -- Fargo Forum
- ND PSC sets April hearing in Watford City for ONEOK's Bakken pipeline -- Williston Herald
- Study: Infrastructure investing could give North Dakotan's an extra $2,100/year -- Fargo Forum
- Political basketball athletes: The side of North Dakota lawmakers you don't see -- KXMB-TV
- SD legislative committee pushes through Keystone XL bills despite concerns -- Fargo Forum
- North Dakota considers easing process for bioremediation of oil spills -- Williston Herald
- Watford City tornado prompts emergency management teams to think ahead -- KFYR-TV
- Tioga police chief turns in resignation, transition period to May 31 announced -- Tioga Tribune
- St. Joseph’s Community Health Foundation to hold grant awards luncheon -- Minot Daily News
- National Weather Service to improve Minot radar system to help western cities -- KXMB-TV
- Mandan High School uses $35,000 Marathon Petroleum grant for welding program -- KFYR-TV
- Beulah High School students react to oil spill scenario, Hess Corp. assists -- Beulah Beacon
- Minot hires Billingsley as community and economic development director -- Minot Daily News
- EIA: Shale oil output from seven formations to hit record 8.4 million bpd in March -- Reuters
- North Dakota CEO offers to build 234 miles of border wall for $1.4 billion -- The Epoch Times
- Polar vortex and near-record cold weather shows importance of the MISO coal fleet -- ACCCE
- Pipeline vandals risk catastrophic outcomes that endanger public safety -- Inside Sources
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Factoid of the Week
Natural gas in North Dakota was first produced near Edgeley in 1892 coming from a non-commercial water well. The oldest commercial production began in 1929 when Montana's Cedar Creek gas field was extended into Bowman County. Gas development continued sporadically in the 1940s and late 1970s to early 1980s. Fewer than 100 gas wells were drilled in the Cedar Creek Anticline in southwest North Dakota.
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March 11
Bismarck
March 14
Fargo
March 19
Dickinson
March 26
Minot
March 27
Bismarck
March 27
Watford City
March 29
Williston
March 30
Dickinson
April 3 - 4
Bismarck
April 11
Minot
April 24 - 25
Bismarck
April 30 - Stanley; May 1 - Grand Forks; May 2 - Jamestown
July 16-17
Bismarck
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Oil prices and rig count
March 8, 2019
WTI Crude: $56.07
Brent Crude: $65.74
Natural Gas: $2.87
North Dakota Active Rigs: 67 (unchanged)
3/8
/2018
-- 59 rigs
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Geoff Simon
Editor/Executive Director
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