ND Defines Stricter Rules for Pipeline Construction & Stripper Well Exemptions

January 14, 2014 R.T. Dukes

A number of changes to the North Dakota Administrative Code could impact pipeline development and stripper wells in 2014. Approved by the North Dakota Industrial Commission last month, forty-seven (47) new rules were proposed, bringing the number of rules for oil and gas operations to seventy (70). According to the Department of Mineral Resources, a division of the Industrial Commission, the changes could take place as early as April 1, 2014. One particular area of the code, 43-02-03-29, addresses pipeline development in the region:

“All newly constructed underground gathering pipelines must be devoid of leaks and constructed of materials resistant to external corrosion and to the effects of transported fluids. All such pipelines installed in a trench must be installed in a manner that minimizes interference with agriculture, road and utility construction, the introduction of secondary stresses, the possibility of damage to the pipe, and tracer wire shall be buried with any nonconductive pipe installed. When a trench for an oil and gas underground gathering pipeline is backfilled, it must be backfilled in a manner that provides firm support under the pipe and prevents damage to the pipe and pipe coating from equipment or from the backfill material.”

The new regulations come at a time when increased scrutiny on pipeline development in the region is piquing. A Tesoro pipeline released approximately 20,000 bbls of crude near Tioga, ND, in October. The cause is believed to be related to corrosion.

NDIC's Authority to Define Stripper Wells Expanded

Yet another area of production that could see an impact are in wells defined as stripper wells. The Director of the Department of Mineral Resources, Lynn Helms, already had the authority to determine stripper well property status. The change could impact the number of wells receiving tax exemptions through stripper well status. The new regulations extend Helms's ability to determine a stripper well. Furthermore, the revised regulations account for horizontal drilling, relative to stripper wells:

"If a well that has previously qualified as a stripper well property is reentered and recompleted as a horizontal well, the stripper well property status on that well will terminate. "

Other facets of production worth noting that will be affected are with the notification of fires, leaks, spills or blowouts and underground injection wells.

Bakken Well Spuds Down - Drilling Efficiency Flat in Q4 - Baker Hughes

January 13, 2014 R.T. Dukes

Bakken and Three Forks Well Spuds Q4 2013

The number of wells started in the Williston Basin was down slightly from 751 wells in the third quarter to 737 wells in the fourth quarter.

Also read:Bakken & Three Forks Well Spuds Set Record in Q3

Baker Hughes also reported a drop in the average rig count during the quarter from 183 to 180 across the basin from quarter to quarter.

Drilling efficiency or the number of wells drilled by each rig held flat at 4.09 per rig.

Watch for the above drilling metrics to be impacted negatively over the coming months of winter. Harsh weather makes drilling efficiency targets hard to achieve.

Continental's CEO Harold Hamm Wants No Part of Harms' "Moderated Approach"

January 9, 2014 R.T. Dukes

Harold Hamm spoke out against Robert Harms' recent comments regarding a "moderated approach" to oil and gas development in North Dakota in an interview with Forum News Service.

Hamm makes the case that the industry has already slowed down quite a bit from the frantic pace of exploration and is now developing leases in a more orderly fashion.

One example is the Bakken rig count. It's down almost 20% from the peak.Multiple wells are being drilled from a single pad and operators are using what they've learned through exploration to drive down drill times.

“We shouldn’t overreact. We’re doing something that’s not only the best thing for North Dakota and for that area up there, but also for our entire nation,” Hamm said. “The world has been changed by the fact that we can produce energy of this quantity in America today.”

A further slow down could have unforeseen ramifications for a industry that has turned North Dakota into an economic powerhouse.

Is Bakken Oil More Flammable?

January 8, 2014 R.T. Dukes

Bakken oil is produced at a high quality that makes it easier to refine into commercial products and makes it easier to ignite.

There is nothing new about oil being flammable. The science has been the same for well....forever. At a point a few decades ago, light-sweet crude (WTI) was the dominate oil quality in the U.S.

Light oil production growth in the Bakken, Eagle Ford, and Permian isn't something the industry has never seen or handled, but it is an unforeseen boom bigger than anyone expected.

Now that trains are moving the oil on a larger scale, it's important the terminals and rail companies meet high standards to ensure safety.

The flash point or lowest possible temperature at which the oil can be ignited is lower for Bakken oil than it is for tar sands coming out of Canada. That fact led the DOT to issue a Bakken Shale Oil Shipping Safety Alert last week.

What's Important to Ensuring Safety in the Bakken?

In short, the answer is YES. Bakken crude is of high quality and more flammable than lower grade crude oil, but that's nothing new and shouldn't be a shock. Emphasis needs to be placed on classifying the crude correctly (which it hasn't been shown that there is a problem there) and making sure the railroads are as safe as possible.

Additional safety measures need to be taken when hydrogen-sulfide or other flammable gases are dissolved in the oil. The oil needs to be degasified before transportation.

The other thing we can do as voters - Make sure pipelines can be built where needed without undue obstacles. The track record speaks for itself - pipelines are the safest and most efficient way to move hydrocarbons.

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Department of Transportation's PHMSA Issues Bakken Shale Oil Shipping Safety Alert

January 3, 2014 R.T. Dukes

The Department of Transportation's (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) has issued a safety alert for Bakken crude.

PHMSA issued the alert to reinforce the need to test, characterize, classify, and where appropriate de-gassify the crude oil before transportation.

PHMSA also wants to remind first responders of that light sweet crude is assigned a packing group of I or II. Those packing groups mean the flash point is below 73 degrees Farenheit and the boiling point for packing group I is below 95 degrees Farenheit.

"Operation Classification" will be an ongoing effort, and PHMSA will continue to collect samples and measure the characteristics of Bakken crude as well as oil from other locations.

Read the full releast at phmsa.dot.gov