Tribal non-profit tackles oil regulation

John Zeller, right, a truck driver who hauls water for the oil industry, gets his photo taken Tuesday, June 30, 2015, in Mandaree, N.D., for a new photo ID required by the West Segment Regulatory Commission to monitor businesses who operate on the Fort Berthold Indian Reservation. Amy Dalrymple/Forum News Service

John Zeller, right, a truck driver who hauls water for the oil industry, gets his photo taken Tuesday, June 30, 2015, in Mandaree, N.D., for a new photo ID required by the West Segment Regulatory Commission to monitor businesses who operate on the Fort Berthold Indian Reservation. Amy Dalrymple/Forum News Service

MANDAREE, N.D. – A newly formed commission to regulate oil and gas activity for a segment of the Fort Berthold Indian Reservation launched this week, but questions remain about how it will work with existing tribal agencies.

Hundreds of oilfield workers attended mandatory meetings in Mandaree Tuesday and Wednesday for the West Segment Regulatory Commission, a new group that aims to monitor and regulate businesses operating in the Mandaree area of the reservation.

Fort Berthold accounts for about 30 percent of North Dakota’s oil production, with much of it concentrated in the Mandaree area. That area also has experienced recent spills and environmental incidents, including the pipeline break a year ago that spilled 1 million gallons of brine near Lake Sakakawea.

The group is still developing its rules, but it aims to address issues related to environmental impacts from oil development as well as reduce drug trafficking, human trafficking and other crimes that have increased along with the jump in population.

Elton Spotted Eagle, the commission’s chief compliance officer, told attendees at a meeting this week that the goal is not to chase away companies, but to have more people monitoring the activity.

“We want to make sure we have our land for our children, our grandchildren,” said Spotted Eagle, who is one of six compliance officers. “We want to hang on dearly to what we have.”

The Three Affiliated Tribes Tribal Business Council approved the charter for the new nonprofit organization, but Chairman Mark Fox opposed it.

Fox said Wednesday he supports the intentions of the group and believes regulations ought to be strengthened to protect the land, but he thinks it should be the tribal government’s job to do that.

“My biggest concern is where does that put our other regulatory agencies?” Fox said. “I want to see how that plays out.”

The West Segment Regulatory Commission’s charter says it will work with state and tribal law enforcement and regulatory agencies.

Initially, all workers and companies that do business in the West Segment will need to register with the commission, get photo ID cards and radio-frequency identification tags to allow for vehicle tracking.

Vincent Wright, a truck driver who hauls water for the oil industry in the Mandaree area, was among the workers who filled out paperwork and got his photo taken for a new identification card this week. Wright said he didn’t have any objections to the new requirements.

“It’s for the safety of the people who live here and are going to be here,” Wright said.

Several who attended the meetings objected to the price of the vehicle monitoring system – about $1,400 – that will be required for every semi that operates in the West Segment.

Cameron Keluche, vice president of Native Resource Management, hired by the West Segment to develop the monitoring system, said the specific technology vendor was chosen because it will allow compliance officers to track illegal dumping. The commission will work in conjunction with other tribal agencies that will have access to the tracking information, Keluche said.

The group also says it will conduct background checks and drugs tests on workers, enforce safe driving rules, test soil and water quality and monitor development such as man camps.

Ron Ness, president of the North Dakota Petroleum Council, said the industry group has been meeting with the West Segment and Tribal Business Council to seek clarification about the new commission. The industry is concerned about duplication of rules and additional fees piled on top of a regulatory process that already involves federal, state and tribal agencies, Ness said.

“We support the goal of increased safety but would rather see the tribal government allocate more resources to police, oversight and other existing regulatory authorities than create a new regulatory entity,” Ness said.

 

Hearings conclude for Dakota Access, but N.D. regulators say more work to do

WILLISTON, N.D. – Many unresolved issues remained Friday after the Public Service Commission concluded its final public hearing on what would be the largest crude oil pipeline in North Dakota.

Dakota Access LLC is still negotiating with landowners for more than 40 percent of the 358-mile pipeline route proposed in North Dakota.

The company, a subsidiary of Energy Transfer Partners, also has yet to reach an agreement with Enbridge about concerns the competitor has about areas where major crude oil pipelines will be close together and in some cases cross.

“It’s pretty clear after today that there’s more work to be done on this project,” Commissioner Randy Christmann said following a nearly 10-hour hearing in Williston.

Commission Chairwoman Julie Fedorchak said while commissioners received a lot of input from concerned landowners, fewer than a handful of people said they flat-out oppose it.

“I continue to be hopeful that the company will reach a voluntary agreement with a vast majority of landowners along this line,” Fedorchak said

Dakota Access proposes a 1,134-mile pipeline that would start near Stanley and carry crude oil to Patoka, Ill. The pipeline would initially carry 450,000 barrels per day and could be expanded to 570,000 barrels per day.

Dakota Access has acquired easements for 58 percent of the route mileage in North Dakota, said Micah Rorie, senior manager of land and right of way. That figure has not changed much since the PSC held similar public hearings in Mandan and Killdeer.

“At that rate, it’s going to be a long time before you get these easements acquired,” Christmann said.

While the level of voluntary participation is not a requirement for a PSC permit, it signals how acceptable a project is to the public, said Commissioner Brian Kalk.

Rorie said most negotiations are tied up with attorneys who represent about two-thirds of the remaining landowners, and he’s confident they’ll be finalizing more agreements soon.

Most landowners who testified Friday said they support the overall pipeline project, but they voiced strong objections to the way the company has handled negotiations.

“The company came into North Dakota and probably didn’t understand the culture that exists here,” said Vawnita Best, who testified on behalf of a grassroots group called the Greater McKenzie County Stewardship Group.

Best, who also is a McKenzie County commissioner, said she’s heard from many landowners who felt strong-armed or threatened with eminent domain by Dakota Access representatives.

Rorie testified that right-of-way agents go through an extensive code of conduct training and are instructed to refer questions about eminent domain to managers.

Some landowners have grown accustomed to getting route changes for small gathering pipelines, but changing the route is more difficult with such a large project, Rorie said. That is being interpreted by some as an unwillingness to work with landowners, he said.

Commissioners also pressed Dakota Access to seriously consider suggestions from private landowners when they have a strong case for route changes, including one alternative proposed to avoid rugged terrain near the Heart River.

Enbridge, a majority owner and operator of North Dakota Pipeline Co., intervened in the PSC hearing to voice concerns about areas where Enbridge pipelines will be in close proximity to the Dakota Access.

Robert Steede, regional director of operations, testified that Enbridge does not oppose the Dakota Access project, but wants to ensure the safety of its own operations.

About 13 miles of existing Enbridge pipelines between Stanley and Tioga are near the proposed Dakota Access route, and the two pipelines would cross seven times, Steede said. In addition, the construction timeline for Enbridge’s Sandpiper project could overlap with the construction of the Dakota Access project.

Enbridge asked the PSC to require that Dakota Access install its pipeline 50 feet away from existing Enbridge pipelines. Steede said that would ensure that construction equipment would not accidentally damage the existing Enbridge line and the separation would prevent confusion for landowners over which company was responsible for reclamation.

Enbridge also wants to ensure that the two companies will operate separate construction areas for its upcoming projects, Steede said.

Christmann said while he appreciates Enbridge’s concern for safety, he fears requiring all pipelines to be 50 feet apart would add more burden on landowners who already have multiple pipelines.

“Aren’t we just enhancing that landowner fatigue when two companies can’t come together and work together on a project?” Christmann said.

The issue of landowner fatigue was a common theme Friday, including testimony from Mountrail County landowner Brian Rice whose land would have the Dakota Access and Sandpiper in addition to existing pipelines.

“The question becomes, how much do you want us to give?” Rice asked.

Several members of area labor unions voiced support for their project and assured landowners that they work hard to protect the environment.

“We’re trained to take care of the right-of-way like it’s our own backyard,” said Matt Duncombe of East Grand Forks, Minn., a Laborers International Union of America union steward who has led environmental crews.

The Midwest Alliance of Infrastructure Now, a coalition that includes labor unions, the Greater North Dakota Chamber and others, also voiced support for the pipeline.

Kalk said the Dakota Access proposal is the most complex pipeline case he’s handled, and he wouldn’t venture a guess on when the utility regulators would make a decision on a permit.

“I’ve never come out of a hearing with this many variables,” Kalk said.

Royalty owners group to gather in Minot for conference

MINOT, N.D. – With North Dakota’s oil industry producing billions of dollars each year for private mineral owners, a group that aims to educate those royalty owners is growing in numbers.

The North Dakota chapter of the National Association of Royalty Owners expects more than 100 people will attend its annual conference this week in Minot, with about half coming from out of state.

Chapter president Dean Zaderaka said the conference has grown each year since the North Dakota chapter formed three years ago to represent private mineral owners. The group now has between 200 and 300 members, he estimates.

“It’s mainly about education of mineral owners so they can understand how to negotiate a lease and the things to be aware of so they have a fair lease with the oil company,” Zaderaka said.

Private royalties from North Dakota oil and gas production were estimated to be more than $4 billion in 2013, according to a North Dakota State University economic impact study.

About 40 percent of private mineral owners live in North Dakota, according to the study.

With so many mineral owners living out of state, that makes it extra challenging for royalty owners to stay up to date on factors in the oil industry that will affect their royalty checks, Zaderaka said.

First International Bank and Trust, where Zaderaka works as a senior trust officer, works with North Dakota mineral owners who live in 25 different states.

Mineral owners who are North Dakota residents also have a lot of questions about negotiating leases and other issues, said Sue Satterthwaite of New Town, who is chapter secretary.

Satterthwaite and her husband, Gary, the chapter treasurer, own minerals and have found the organization to be a good educational resource.

“There’s not a standard lease ever, everything is negotiable, and a lot of people misunderstand that,” Satterthwaite said.

The conference, Thursday and Friday at the Grand Hotel in Minot, covers topics including rail safety, a North Dakota legislative update, state tax policy, mineral appraisals, pipelines and legal issues. A bus tour of the Bakken is scheduled for Thursday morning. Lisa Westberg Peters, author of “Fractured Land: The Price of Inheriting Oil,” is the keynote speaker on Friday.

Registration is $125 for members and $150 for non-members. For more information about the conference, visit naro-us.org/NorthDakota or call toll-free (855) 622-7126.

 

Fewer well completions behind dip in oil production

WILLISTON, N.D. – Oil well completions dropped sharply in April, contributing to the slight decrease in North Dakota’s monthly oil production.

Lynn Helms, director of the Department of Mineral Resources, said in his monthly update on oil production released Friday that operators added 94 new oil wells in April, compared with 244 that were completed the previous month.

North Dakota oil production fell 1.8 percent in April to less than 1.2 million barrels per day, according to preliminary figures.

To maintain production near 1.2 million barrels per day, companies need to complete 110 to 120 wells each month, Helms said.

The number of drilling rigs operating in North Dakota was 77 on Friday afternoon, compared with 83 that were operating in mid-May.

“Operators have each been experimenting with running one to two fewer rigs than their planned 2015 minimum to see if drill times and efficiencies will continue to improve,” Helms wrote, adding that weak low oil prices are driving the slowdown.

Ron Ness, president of the North Dakota Petroleum Council, said he doesn’t expect the rig count to go much lower if current conditions continue. The state had 186 rigs operating in mid-December when oil prices started to fall, he noted.

“It seems to me that we’re fairly near bottom,” Ness said.

At the end of April, there were an estimated 925 wells that had been drilled but waiting on hydraulic fracturing crews, an increase of 45 from March, according to Helms.

Ness said he expects the number of well completions to remain flat while companies complete enough to maintain cash flow and hold off on others until prices recover.

“I expect companies to continue to use that inventory of uncompleted wells as kind of their grain bin,” Ness said.

 

Vital Oil Patch water project celebrated

WILLISTON, N.D. – An expanded water treatment plant in Williston is making it possible for the entire region to grow.

Officials gathered in Williston on Wednesday to celebrate the expansion of the Williston Regional Treatment Plant, which treats water from the Missouri River that is piped to rapidly growing communities in the Oil Patch.

The Western Area Water Supply Project, a response to the needs of the booming population, provides high-quality drinking water to 70,000 people.

“Without water, there’s no growth,” said Jaret Wirtz, executive director of the Western Area Water Supply Authority. “Housing developments cannot be built. Businesses cannot open.”

The recently completed expansion of the treatment plant brings the capacity to 21 million gallons per day, allowing it to serve an additional estimated 20,000 people.

Gene Veeder, McKenzie County economic development director, said the water treated in Williston is playing a major role in housing developments in Watford City.

“This is without a doubt the most significant economic development project this area has ever seen, and likely will ever see,” Veeder said.

Gov. Jack Dalrymple participated in the celebration, noting that the state has committed about $290 million in funding for the Western Area Water Supply Project.

“Anything short of this project would not have been adequate to keep up with the growth and industry development we’ve seen,” Dalrymple said.

About 540 miles of pipelines have been installed for the project, with another 570 miles under construction and an additional 65 miles under final design.

The water project serves 11 cities in Burke, Divide, McKenzie, Mountrail and Williams counties. It’s projected to reach 160,000 water users by 2038.

Faces of the Boom: Williston café owner no longer nervous about slowdown

Lonnie Iverson, pictured Tuesday, June 9, 2015, at her business, Lonnie's Roadhouse in Williston, N.D., says her recently expanded cafe is still busy despite a decline in oil activity. Amy Dalrymple/Forum News Service

Lonnie Iverson, pictured Tuesday, June 9, 2015, at her business, Lonnie’s Roadhouse in Williston, N.D., says her recently expanded cafe is still busy despite a decline in oil activity. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – As oil activity slowed down a few months before her Williston café was set to open at an expanded location, Lonnie Iverson grew nervous.

“I actually bought a new house, too, and then the oil prices dropped,” the 34-year-old Williston native said. “It puts a little twist in everybody’s gut, I suppose.”

But Lonnie’s Roadhouse, which opened in March next to its former location, has stayed busy, despite layoffs of oil workers and fewer truckers parked at the gas station nearby.

“We just pack them in here,” Iverson said. “There are some people I know that have left, but for the most part, everybody’s still here.”

More women come to the café now that it’s no longer connected to a gas station near truckers who sleep in their trucks.

“I think they were scared to come into the other place,” said Iverson, adding that she likes the truckers because they keep an eye on things for her.

After the oil boom brought an influx of new people to Williston, Iverson had to stop keeping the café open 24 hours a day. Too many rowdy, drunk customers would come in after midnight, including a stripper who once assaulted one of her waitresses, she said.

“I wanted to stay open for the guys that actually needed a place to go and eat, but yet we couldn’t control it,” said Iverson, who bought the restaurant 10 years ago. “You shouldn’t have to have a bouncer at a café.”

After changing her hours, Iverson gave a key to the café to a group of local men who were used to coming into the restaurant early to be at work by 6 a.m.

“They’ll start the coffee,” she said.

Iverson was recently honored by Williston Economic Development as the woman-owned business entrepreneur of the year. Even with drop in drilling, Iverson said she still thinks there are good opportunities for entrepreneurs in Williston.

“I think anybody could start any little business they wanted right now,” Iverson said. “If you find something different, you can do it.”

 

N.D. oil production down slightly in April

WILLISTON, N.D. – North Dakota oil production decreased 1.8 percent in April to nearly 1.2 million barrels a day, preliminary figures released Friday show.

Natural gas production increased 1.4 percent in April to an average of 1.5 billion cubic feet per day, according to the Department of Mineral Resources.

Director Lynn Helms said last month he anticipates the state’s oil production to remain between 1.1 million and 1.2 million barrels per day until oil prices recover. Helms was not available to make comments on April’s oil production Friday due to scheduling conflicts.

Natural gas flaring dropped from 19 percent to 18 percent in April, according to the North Dakota Pipeline Authority.

The number of drilling rigs operating in North Dakota on Friday was at 76, the lowest since December 2009, according to the Department of Mineral Resources.

Most drilling is concentrated in the four core Bakken counties – McKenzie, Williams, Mountrail and Dunn. Three rigs were operating Friday in Divide County and one was active in Bowman County.

The percent of North Dakota crude transported by rail remained unchanged in April from the previous month at 54 percent, the Pipeline Authority said in its monthly report.

 

UPDATED: Hearing set for N.D. challenge to federal fracking rule

BISMARCK – North Dakota stands to lose $300 million a year in oil income and 1,900 jobs if a federal rule on hydraulic fracturing takes effect later this month, state officials argue in court documents.

North Dakota has filed a request for a preliminary injunction against the Bureau of Land Management, seeking to delay implementation of the agency’s new fracking rule until the court can review a challenge filed by North Dakota, Wyoming and Colorado.

A hearing is set for June 23 in U.S. District Court in Casper, Wyo.

North Dakota Attorney General Wayne Stenehjem, who will attend the hearing, said the BLM rule set to take effect June 24 would disrupt oil and gas development in the state and cause North Dakota to lose $300 million in mineral royalties and tax income in the next fiscal year.

In April, North Dakota intervened in a lawsuit against the BLM. Federal lands and minerals, including the Fort Berthold Indian Reservation, make up about 40 percent of North Dakota’s oil production.

North Dakota officials favor state regulation of fracking and say the BLM rules would
cause lengthy permitting delays.

“We simply feel that our rules are better, they are effective and we are much better and much more capable of actually enforcing them than they are,” Stenehjem said in an interview Wednesday.

Lynn Helms, director of the Department of Mineral Resources, writes in an exhibit filed in court that 10 of 22 oil companies with significant operations on federal and Indian lands will leave North Dakota if the rule takes effect.

Helms estimates those companies leaving would permanently cost the state $9.4 billion in royalties and taxes. In addition, Helms estimates North Dakota would lose 1,900 jobs.

Stenehjem and the attorney generals of Wyoming and Colorado wrote to the Department of Interior in May asking to extend the effective date of the new rule by at least nine months while court challenges are considered.

The department declined to extend the date, saying in a letter filed in court that implementation would not be a significant burden for the industry and would not discourage oil development on public or Indian lands.

Any responses to North Dakota’s request for a preliminary injunction are due June 19.

At the June 23 hearing, which is scheduled to take six hours, the court also will hear separate requests from Wyoming and Colorado.

The BLM is holding a workshop on June 22 in Bismarck with the North Dakota Petroleum Council to answer questions for industry leaders about the new fracking rule.

Storage tanks still a hurdle for pipeline project

WATFORD CITY, N.D. – What would be North Dakota’s largest oil pipeline project still needs approval for three oil storage facilities, including a Watford City location that was rejected by local officials this week.

The McKenzie County Planning and Zoning Commission voted 3-2 this week to deny a permit to Dakota Access Pipeline to locate an oil tank terminal across U.S. Highway 85 from Watford City’s extraterritorial area.

Lindsey Perusich, assistant McKenzie County planner, said the location – adjacent to an area populated with workforce housing – was the main reason some commissioners and members of the public objected to the facility.

The proposed Dakota Access Pipeline would start at Stanley and carry 450,000 barrels of Bakken crude each day to Patoka, Ill. The 1,134-mile route is under review by the North Dakota Public Service Commission.

Dakota Access has received approval from local officials for tank terminals near Tioga, Epping and one at Johnson Corner in McKenzie County. The company still needs approval for facilities near Watford City, Stanley and Trenton.

Each terminal would have two or three storage tanks ranging in size from 100,000 to 200,000 barrels.

The Watford City proposal drew opposition from neighboring residents, but some withdrew their concerns after getting more information about the company’s plan for fire prevention and safety precautions.

Chuck Frey, vice president for Energy Transfer Partners, said the oil tanks would have internal floating roofs to minimize vapors inside the tank, as well as protection from lightning strikes. The facilities also would have fire-suppression foam on site and be constructed with dikes that could contain potential spills, Frey said.

McKenzie County officials supported the terminal at Johnson Corner, which is south of Watford City, because there already was a pipeline corridor in that area, Perusich said. But the Watford City location would not be in a similar pipeline corridor.

“There aren’t a lot of pipelines in that area, so all the surrounding landowners would end up having to sign easements for the pipelines to get to that spot,” Perusich said.

Dakota Access says it has nearly 60 percent of easements acquired in North Dakota. In McKenzie County, the company has 39 percent of easements, said Micah Rorie, who manages the project’s acquisitions for North Dakota.

Some planning commissioners cited concerns about the lack of voluntary participation by landowners.

Dakota Access could go before the full McKenzie County Commission and ask commissioners to overturn the Planning and Zoning Commission’s denial.

Denis Kesterson, planning and zoning administrator for Stanley, said the location just west of where they city plans to expand would be consistent with other nearby industrial developments. He said the project meets or exceeds all safety standards. A public hearing will be held in July.

The Williams County Commission will consider the proposed tank terminal near Trenton on July 7.

UPDATED: Company launches experiment to re-use oil drilling waste

BISMARCK – An oilfield service company says it can recycle Bakken drilling waste while protecting the environment, turning waste that would otherwise go to a landfill into material for roads or other uses.

Nuverra Environmental Solutions is one of three companies that will launch a pilot project approved by the North Dakota Department of Health to recycle solid drilling waste.

“We want to make sure that this program is good for the landowner, it’s good for the operator and good for the environment,” said CEO Mark Johnsrud, who announced the new initiative Monday from the state Capitol.

Every Bakken well produces an estimated 26 semi-truck loads of waste known as drill cuttings that need to be mixed with a stabilizing material such as fly ash and disposed of, the Department of Mineral Resources has said.

Nearly 2.5 million tons of oilfield waste went to special waste landfills in North Dakota last year, and that accounted for about 20 to 25 percent of the total drilling waste, said Scott Radig with the North Dakota Department of Health. A majority of drilling waste is buried in cuttings pits on drilling locations.

“If you go talk to a lot of farmers, they don’t want these pits on their land anymore,” Johnsrud said. “The possibility of having something bad happen is out there.”

Nuverra, which has invested more than three years and $30 million into this initiative, says its process called Terrafficient can recycle 100 percent of that waste, according to Johnsrud.

Companies in other states successfully recycle drilling waste, but the high salt content in Bakken drill cuttings has made it more challenging to develop a process that protects the environment.

“The biggest concern is really the salt that’s in the drilling waste and the potential for it to impact plants and groundwater,” said Radig, director of the Division of Waste Management.

The health department has approved Nuverra and two other companies to move forward with two-year projects to test the technology and develop regulations for recycling drilling waste. Three other proposals are still being reviewed, Radig said.

“Potentially, it could be a real benefit, both to counties that are looking for scarce materials to make roads, or as an alternative to piling up a bunch of waste in a landfill,” Radig said.

Nuverra is working with the Energy and Environmental Research Center at the University of North Dakota to test to the technology before trying it in the field in the Watford City area.

Nuverra proposes to reuse the drilling waste in three ways: mix it with gravel so the gravel will compact better and not wash off the roads; reuse it as a road base material; and use it within municipal landfills as daily cover material, Radig said.

The testing will include using the recycled material to construct a road within Nuverra’s own landfill facility near Arnegard, Radig said. A gravel road in central McKenzie County that is still being selected will be used to test mixing the recycled material with gravel, Radig said.

Additional applications, including deicing roads and use as bedding for pipeline construction, are also being studied but won’t be part of the pilot project, said John Harju, EERC associate director of research.

The experiments are not without critics.

Wayde Schafer with the Dacotah chapter of the Sierra Club testified at the Legislature against recycling drill cuttings for road material, which he argued does not meet the definition of a beneficial use. He also raised concerns about how well it will be monitored and the potential for environmental impacts.

“High levels of salt in oilfield waste is toxic for our land which is already experiencing impacts from brine spills, releases and accidents,” Schafer said.

Dennis Fewless, who recently retired from the health department as director of Division of Water Quality, will return to the department part-time to oversee the project. Fewless will work with the companies to set up testing procedures and verify the treatment will have no environmental impacts.

“It is an important project and we wanted somebody to be able to dedicate some time to it,” Radig said.

Symmetry Oilfield Solutions of Colorado and Renewable Resources LLC of Killdeer also are approved by the health department to do test projects. Those companies do not plan to work with the EERC, but they will be required to work with a certified lab, Radig said.

“Each company kind of has their own unique ideas and ways that they think that they can work with this material beneficially,” Radig said.

State leaders, including Gov. Jack Dalrymple, joined Johnsrud in making the announcement at the Capitol on Monday. Legislators approved a bill last session, House Bill 1390, which paved the way for the pilot projects.

Tons of oilfield waste disposed of in North Dakota*

2014: 2.5 million

2013: 1.8 million

2012: 1.1 million

2011: 0.5 million

Source: North Dakota Department of Health

Figures represent oilfield waste, primarily drilling waste, disposed of in special waste landfills permitted by the North Dakota Department of Health. It does not include drilling waste buried on drilling locations, which is how a majority of the waste gets disposed of. Figures for 2015 are expected to be lower due to the drop in drilling.