McKenzie County mega-unit, flaring on agenda for Industrial Commission

BISMARCK – A petition to reconsider a controversial oil drilling proposal in McKenzie County will be heard on Monday by the North Dakota Industrial Commission.

Fargo attorney Sean Foss argues in the petition that mineral owners were denied due process when the Industrial Commission approved a proposal from QEP Resources in January to develop 25,000 acres as one large drilling unit.

Commissioners approved the plan, known as the Grail-Bakken unit, with a 2-1 vote, with Gov. Jack Dalrymple opposing it. QEP Resources needs approval from 60 percent of mineral owners and working interest owners to proceed with the unit.

Foss, who represents mineral owner Edward Vanover of Bismarck, writes in the petition that interested parties were denied an opportunity to comment on a revision to the proposal that changes how oil revenue is divided.

In addition, Foss writes that the Industrial Commission did not have the opportunity to consider other briefs submitted in opposition to the plan, and he argues that the evidence submitted by QEP did not meet the requirements for developing the area as a unit.

QEP Resources has said developing the area as one large unit, rather than typical 1,280-acre Bakken spacing units, allows the company to recover more oil while reducing the impact on the land.

The proposal drew opposition from mineral owners during a hearing in November, many raising questions about the fairness to individual owners.

The Industrial Commission meets at 11 a.m. Monday in the Pioneer Room of the State Capitol, with the meeting expected to move to the Governor’s Conference Room at approximately noon.

Also Monday, the Department of Mineral Resources will present its review of the North Dakota Petroleum Council’s flaring task force report. The industry group presented recommendations in January to reduce natural gas flaring, and the commission is expected to take action on the next steps to implement the plan.

The Industrial Commission also will consider a request from Denver-based Gadeco LLC, a company that requested to exempt flared natural gas from taxes and royalties. The company argues in its petition that it is not economically feasible to capture the natural gas from a well in Williams County.

However, several mineral owners are asking the Industrial Commission to deny the petition, arguing that a natural gas pipeline is a half-mile away from the well and landowners are willing to grant pipeline easements.

4 thoughts on “McKenzie County mega-unit, flaring on agenda for Industrial Commission

  1. I’m wondering how the commission can consider a flaring exemption without putting it on a regular docket – the ndic website doesn’t mention it. Which well is Gadeco proposing to waste gas from ? Gadeco has already wasted way too much gas on wells they operate.

    • My understanding is the request was heard on Dec. 19 and because there is opposition from mineral owners, it is coming to the full commission. The well is Golden 25-36H, which was completed as a producing well in July 2012.

      This is what the agenda says: Consideration of Order 24236 issued in Case 21509 heard on December 19, 2013 regarding a request to allow gas flaring and grant an exemption from taxes and royalties

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