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UPDATED: Dalrymple says ND aims to nearly double pipeline capacity

BISMARCK - North Dakota's governor on Tuesday set a goal for the state's pipeline capacity to nearly double within two years, part of a plan to curb the wasteful flaring of natural gas in the bustling Bakken oil field.

While oil production has more than tripled in the past decade to 1 million barrels of oil equivalent (boed) per day, making North Dakota the fastest-growing economy in the United States, the pipeline network for transporting natural gas has lagged.

Aiming to change that, Governor Jack Dalrymple said the state aims to have capacity increase to 1.4 million boed by 2016, up from roughly 780,000 boed currently.

"We will reduce flaring," the governor told executives, regulators and investors at a pipeline summit he hosted in the state's capital. "It's just that simple."

Natural gas that is produced along with crude oil needs to be burned, or flared, if there is no pipeline to take it to market or a processing plant. Roughly 30 percent of the fuel was flared in April, the latest month for which statistics are available.

While down from an all-time high of 36 percent in September 2011, Dalrymple had hoped for a lower number.

The governor, known for working closely with energy companies on development, acknowledged that he cannot force Oneok, Enbridge, MDU Resources and other pipeline companies to expand their networks.

But he described himself as the industry's cheerleader and promised to encourage, through regulation and other means, more pipeline development to decrease reliance on trucking and railroads.

"Although rail has played a critical role to market our petroleum, over the long term we're looking for the safest way to market our product," he said.

Dalrymple and other regulators changed state policy on June 1 to require energy companies to submit a detailed plan when filing for a drilling permit about how they planned to capture and use any natural gas released by a new well.

Updated policies for existing wells are set to be released on July 1. Both steps effectively encourage the development of pipe.

Oneok and other pipeline operators have been working aggressively to build their natural gas pipeline network in the state, though they have been constrained by weather, right-of-way issues and other factors.

Reducing flaring is less of a concern for North Dakota residents than cutting the number of large trucks prowling the state's highways, said Gene Veeder, head of McKenezie County's economic development office.

"Our local citizens are less worried about global warming then they are about the 1,100 trucks that go by their mailbox every day," Veeder said at the summit.