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Industrial Commission denies oil company relief from flaring restrictions

BISMARCK-The North Dakota Industrial Commission on Wednesday denied an oil company's request for long-term relief from natural gas flaring restrictions, saying it would be counter to the state's gas capture policy.Marathon Oil requested exemption...

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A flare on a North Dakota oil well. Forum News Service file photo
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BISMARCK-The North Dakota Industrial Commission on Wednesday denied an oil company's request for long-term relief from natural gas flaring restrictions, saying it would be counter to the state's gas capture policy.

Marathon Oil requested exemptions from the state's flaring restrictions for several wells predominantly on the Fort Berthold Indian Reservation until larger pipelines can be installed in the area.

Director of Mineral Resources Lynn Helms recommended denying Marathon's request, which sought relief from the policy that requires companies to capture 85 percent of the Bakken natural gas produced.

Helms said the area lacks sufficient pipelines and compressor stations to capture natural gas, but allowing the exception would open the door for additional flaring in other areas that also lack infrastructure.

"That would take us backwards very quickly in terms of gas capture," Helms said.

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Oil companies captured 86 percent of natural gas produced statewide in November, according to the the most recent figures available. The industry is having more flaring issues at Fort Berthold, where the gas capture rate was 75 percent in November.

Helms said additional steps to approve pipelines on the reservation are making it more difficult for companies to build or expand infrastructure. Helms said he plans to discuss the challenges with representatives of the Mandan, Hidatsa and Arikara Nation in February and is working to reach out to the Department of Interior about the Bureau of Indian Affairs process.

Gov. Doug Burgum, chairman of the three-member Industrial Commission, said a "bureaucratic labyrinth" is creating the flaring issues on the reservation, while areas adjacent to Fort Berthold have much higher gas capture rates.

Without adequate infrastructure, companies will have to slow drilling and restrict oil production to comply with the state's gas capture goals, Helms said.

Attorney General Wayne Stenehjem said, when the commission adopted the gas capture goals, members hoped it would prompt more infrastructure development, not throttle back production.

The state's gas capture goals become more aggressive in November at 88 percent, a rate Helms has said will be difficult for the industry to meet. Helms and Pipeline Authority Director Justin Kringstad are meeting with industry leaders on Friday to discuss flaring and opportunities for natural gas infrastructure investment.

The Industrial Commission did grant two smaller flaring exemptions on Wednesday that provide temporary relief from flaring restrictions.

The commission granted a one-year exemption for RimRock Oil and Gas to flare in Dunn County in an area that lacks sufficient gathering pipelines. Helms said he believes allowing the company to produce one well for a year without restrictions will demonstrate the viability of investing in a gathering pipeline system for that area, potentially leading to a $400 million investment.

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The commission also allowed a one- to two-month exemption from flaring restrictions for Marathon due to flaring that was caused by mechanical repairs needed on a pipeline.

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