North Dakota Fights Fracking Rule

North Dakota Fracking
North Dakota Fracking

Two days after North Dakota filed an injunction to delay new federal fracking rules, a district court grants a temporary reprieve.

Related: New Fracking Rules for Public Lands

U.S. District Court Judge Scott W. Skavdahl delayed the new ruling, which was to go into effect this week, saying that permitting of oil and gas wells on federal land will proceed under current regulations until July 22nd.

The case before Judge Skavdahl combined a challenge from North Dakoa, Wyoming and Colorado with one from industry groups who believed the Bureau of Land Management (BLM) did not follow federal rule-making law and exceeded their authority.

Related: Federal Fracking Regulations Challenged

Jessica Kershaw, a BLM spokeswoman said “While the matter is being resolved, the BLM will follow the court’s order and will continue to process applications for permit to drill and inspect well sites under its pre-existing regulations.

In March, the BLM passed the new regulations after a four-year investigaiton that included over 1.5 million public comments. The new ruling requires:

  1. A validation of well integrity in order to protect groundwater supplies
  2. Companies to publicly disclose chemicals used in hydraulic fracturing through the website FracFocus, within 30 days of completing fracturing operations
  3. Higher standards for interim storage of recovered waste fluids from hydraulic fracturing to mitigate risks to air, water and wildlife
  4. Companies to submit more detailed information before fracking to reduce the risk of cross-well contamination

In the following video, North Dakota Attorney General, says that the state will go through the lengthy process of a filing a permanent injunction if necessary.

North Dakota Fights Fracking Rule

North Dakota Developments, LLC
North Dakota Developments, LLC

North Dakota officials are warning that a new federal fracking rule will likely cost the state $300 a year in income and 1,900 jobs.

In March,the Bureau of Land Management (BLM) finalized new rules to regulate hydraulic oil and gas fracturing on public lands. Several states have filed suit, arguing that the new rules supersede the state’s authority and “invade” the jurisdiction of the state regulatory bodies.

Related: Federal Fracking Regulations Challenged

The ruling is particularly significant to North Dakota because of it vast public lands. It is estimated that BLM has an interest in about a third of the drilling units in North Dakota that were acquired the mineral rights on defaulted farms during the the Great Depression.

Lynn Helms, director of the Department of Mineral Resources believes that the ruling will cause companies to leave North Dakota, which could cost the state $9.4 billion in royalties and taxes.

The rule is set to take effect on June 24th and to delay implementation, North Dakota filed a request for a preliminary injunction against the BLM while the court reviewed previous challenges. A hearing is set for June 23 in U.S. District Court in Casper, Wyo.

Read more at dmr.nd.gov

Bakken Well Completions Spike

Bakken Well Completions Spike

Bakken well completions rose sharply last month, according to the North Dakota Department of Mineral Resources (DMR). The DMR reports a preliminary completion count for March was 189, up 350% from 42 the previous month.

Related: Bakken Rigs Decrease to 77

Many oil and gas companies who have been hard hit by low crude prices are postponing well completions as a temporary measure in order to wait out the crisis with plans to resume production when oil prices rebound. But oil prices remain unstable, why would North Dakota experience a spike?

Director of DMR Lynn Helms speculates that the increase is likely due to state-mandated time limits and major tax incentives, which forced companies to bring 125 wells online by June to comply with time limits.

Nathan Conway, CEO of Fortis Energy Services, told OAG360 that “In the state of North Dakota, a well can only be left for 12 months after being drilled before it needs to be either completed or temporarily abandoned. Many companies are choosing to complete the wells now rather than plugging them.”

The DMR further reports that at the end of March there were an estimated 880 wells waiting on completion services.

Read more at dmr.nd.gov

N.D. Legislative Session Ends

State Seal of North Dakota
State Seal of North Dakota

When the North Dakota Legislative Assembly convened in January, lawmakers faced an uncertain climate caused by falling oil prices. By all accounts the session was a success, with one local news source saying it was a "solid performance by legislators".

Legislators basically had to start over by pulling apart Gov. Jack Dalrymple’s proposed budget. They were forced to make some difficult decisions regarding spending cuts, while finding the money to fund  important projects.

The first order of business was the passage of the 'surge' bill that supplies $1.1 billion for state infrastructure projects. This money will go to improve highways, airport improvement projects,  school districts, law enforcement agencies and emergency medical services.

Related: Governor Dalrymple Commits to Infrastructure

Another huge item on the session's agenda was adjusting the state's oil tax formula. House Bill 1476 lowers the state’s 6.5 percent oil extraction tax to 5 percent effective Jan. 1, 2016, a decision that got mixed reviews from both sides of the aisle.

I guess if you had to boil it down it would be squandered opportunities and misplaced priorities. That really is what marked the session. Cutting the oil extraction tax by 23 percent,” says Sen. Mac Schneider. But Sen. Rich Wardner (R) disagreed, saying “I think it’s going to be big for North Dakota. I think we’re going to get the industry to put more investment into the state now that they know it’s stable and steady.

Highlights of North Dakota’s 64th Legislative Assembly:

  • A record $14.4 billion budget for the 2015-17 biennium, up from $13.7 billion for 2013-15
  • $397.2 million in tax cuts were approved
  • A record K-12 budget was passed including $3 million for expanding pre-K programs
  • Approved $3.4 million for additional staff at the Department of Mineral Resources (DMR)
  • Passage of House Bill 1358 that authorizes the NDIC to develop new rules involving the construction and operation of gathering pipelines

Lower Oil Tax for North Dakota

North Dakota Oil Tax Reductions
North Dakota Oil Tax Reductions

North Dakota is one step closer to cutting the price-triggered exemption that will lower the extraction tax on oil.

Related: North Dakota Tax Trigger Getting Closer

On Friday, North Dakota lawmakers cleared the way to change a 30 year old tax structure that gave some tax breaks for the oil industry have been linked to a price "trigger."  Debate in North Dakota’s House was fierce and ended in a 66-26 vote in favor of cutting the state’s oil tax rate from 11.5 percent to 10 percent.

Republicans believe that this will provide a more stable table policy that will boost the state’s economy, but Democrats have said that it will cost the state billions over the next 10 years. The legislature’s research group estimates that the new tax structure will add $120 million to the state’s coffers between 2015-2017.

Now that the bill has cleared both house and the senate, the bill is now on its way to the governor’s desk for final approval.

Governor Dalrymple’s spokesman Jeff Zent said the governor had not studied the bill. “Generally speaking, a flat tax offers the advantage of greater economic certainty,” Zent said. “But the details of any plan are very important, and we haven’t seen a final proposal.

To read the full bill, visit nd.gov.