Gas flare suspected as cause of McKenzie County fire

 

A grass fire on Tuesday, April 14, 2015, damaged an estimated 2,500 to 3,000 acres in in McKenzie County, N.D. Photo courtesy of McKenzie County Emergency Management

A grass fire on Tuesday, April 14, 2015, damaged an estimated 2,500 to 3,000 acres in in McKenzie County, N.D. Photo courtesy of McKenzie County Emergency Management

KEENE, N.D. – Local officials point to a natural gas flare as the likely cause of a grass fire that scorched about 3,000 acres in McKenzie County this week.

McKenzie County Emergency Manager Karolin Rockvoy and Keene Fire Chief John Rolfsrud both attribute the fire that started about 2:30 p.m. Tuesday to a nearby oil well that was flaring.

“I couldn’t tell you for sure, but that’s my best guess estimate,” Rolfsrud said Wednesday.

Rockvoy said the fire originated with a flare at a Whiting Petroleum well that was up on a hill.

“When the winds came, it took it all downhill,” Rockvoy said said of how the fire spread. “This wind was unlike anything yesterday, it was crazy.”

The U.S. Forest Service said the cause of the fire, which primarily affected federal lands, is still under investigation. The state Department of Mineral Resources also is investigating.

Volunteer firefighters from Keene, Watford City, McKenzie County, Mandaree and New Town worked through the night to contain the fire and prevent it from damaging nearby structures. No one was hurt.

Forest Service personnel, including staff from Missoula, Mont., remained on scene Wednesday to monitor the area, said spokeswoman Babete Anderson. The Forest Service is still working to identify the perimeter of the fire damage, which is estimated to be 2,500 to 3,000 acres, she said. It includes some private lands as well as federal.

Rolfsrud said he’s seen natural gas flares occasionally cause fires when liquids or solids come through the line, which can be caused by equipment malfunctions.

“Problems magnify when it’s windy,” Rolfsrud said. “It doesn’t take much when it’s this dry and hot.”

Dry conditions across the state prompted Gov. Jack Dalrymple to issue a statewide fire emergency and burn ban through the end of the month.

The Department of Mineral Resources has recently reminded oil and gas operators to be cautious about the potential for fires, and field staff are monitoring that as they’re out on locations, spokeswoman Alison Ritter said.

“We have been advising companies to look at the sites, make sure that they’re clean and any type of potential fire hazard is removed,” Ritter said.

Messages seeking comment from Whiting representatives were not returned Wednesday.

Rockvoy complimented Whiting on the company’s response to the incident. Nuverra, an oilfield service company in Watford City, trucked in water for fire crews.

Oil production down for second straight month

WILLISTON, N.D. – North Dakota oil production fell 1.2 percent in February, the first time since 2011 that the state has seen back-to-back drops in monthly oil production.

Low oil prices have prompted operators to postpone bringing new wells online, a trend that’s expected to continue until June, Director of Mineral Resources Lynn Helms said Tuesday.

The state produced an average of just under 1.18 million barrels of oil per day in February, according to preliminary figures. At the end of February, there were a record 900 wells waiting for fracking crews, an increase of 75 from the previous month, Helms estimates.

Production is expected to decline by 1 or 2 percent for the months of March, April and May. But on June 1, a state tax incentive known as the “large trigger” could take effect and contribute to an increase in production.

“I think we’ll see a big catch-up in June,” Helms said, adding that he expects production will return to about 1.2 million barrels per day.

Ninety-one drilling rigs were active in North Dakota on Tuesday, the lowest since January 2010. Major operators indicate that another five rigs are on the margin and could become idle, Helms said.

Helms had projected the rig count would be 120 to 130 at this time and he said he was surprised by how rapidly the rig count fell. Initially, operators told Helms they planned to pull back on drilling after completing their contracts, but several operators decided to buy out their contracts early.

Drilling on the Fort Berthold Indian Reservation fell at a higher rate than the rest of the state, dropping from 18 rigs in January to nine in February.

A state tax incentive that took effect on Feb. 1 does not apply to new wells drilled on trust lands within the reservation.

“We saw operators there really pull back big time this last month in terms of rig count,” Helms said.

Companies reduced natural gas flaring to 19 percent in February, the lowest rate since July 2010.

Helms estimates that oil production was curtailed by about 9,000 barrels per day in February by companies striving to meet the state’s gas capture goals.

It’s too soon to know if oil production will be affected by the new oil conditioning order that took effect on April 1 requiring Bakken crude to be treated so it has a vapor pressure of no more than 13.7 pounds per square inch.

Companies can meet the new standard by operating their equipment at specific pressures and temperatures. If they choose an alternative method, companies will need to submit documentation that shows they are meeting the standard.

The Department of Mineral Resources has surveyed more than 1,000 heater treaters, the equipment used to condition the oil, and found about 90 percent compliance, Helms said. For the equipment that is out of compliance, the department is requiring companies to submit vapor pressure tests to confirm that the oil meets the standard, Helms said.

The department also has received about 600 vapor pressure tests and 99 percent are in compliance with the new order, Helms said. Those that are out of compliance are given 48 hours to adjust equipment and retest.

Rail transportation of Bakken crude fell below 700,000 barrels per day in February, down from about 750,000 barrels per day in January, according to the North Dakota Pipeline Authority.

Director Justin Kringstad said factors that contributed to that decrease include the overall decline in oil production and the Double H Pipeline that recently went into service. The Double H, with the capacity of transporting 84,000 barrels per day, starts in McKenzie County and transports oil to Guernsey, Wyo.

On Bakken’s fringe, business owners needing to get creative

Deborah Lamb and Mike Ferris, pictured Friday, April 3, 2015, own the Teachers Lounge and Old School Center in Fortuna, N.D., which has seen business slow as oil drilling has dropped in the area. Amy Dalrymple/Forum News Service

Deborah Lamb and Mike Ferris, pictured Friday, April 3, 2015, own the Teachers Lounge and Old School Center in Fortuna, N.D., which has seen business slow as oil drilling has dropped in the area. Amy Dalrymple/Forum News Service

FORTUNA, N.D. – When an Arizona couple opened up a bar and dorm-style lodging for oilfield workers last year in far northwest North Dakota, the bar was packed and the rooms were booked solid.

But as low oil prices prompted drilling to slow in the fringe areas of the Bakken like the Fortuna area in Divide County, many of their customers left the region.

The number of rooms being rented in the renovated Fortuna school building they call the Old School Center is down by about half from before Christmas. The bar – they named it the Teachers Lounge – still has some busy nights, but they now order 40 to 45 cases of beer from one vendor instead of 88.

Owners Mike Ferris and Deborah Lamb say they’re getting creative, like adding a pool league and starting a horseshoe night, to maintain a customer base until oil prices rebound.

“You’ve got to keep going with the flow,” Ferris said. “It’d be awesome to go with ‘Build it and they will come,’ but I think it’s more like ‘Build and they will come and go.’”

Divide County had four drilling rigs operating on Friday, compared with 15 rigs that operated in the county in February 2013, according to the Department of Mineral Resources. The department estimates that every drilling rig supports 120 jobs.

But even though drilling in the area is down, oil production is up. Divide County had 743 active wells that were producing nearly 43,000 barrels of oil per day in January, the latest figures available.

The region also has other projects in the works, such as a gas plant and a new facility for Murex Petroleum, that continue to attract workers to the region.

“It got pretty lonely up here the last couple of months,” Ferris said. “But we’ve got the people who are still working up here and the support of all the great locals.”

Deborah Lamb is pictured in the convenience store, the former eighth-grade classroom of the old Fortuna school. Amy Dalrymple/Forum News Service

Deborah Lamb is pictured in the convenience store, the former eighth-grade classroom of the old Fortuna school. Amy Dalrymple/Forum News Service

Ferris and Lamb moved from Tucson, Ariz., to Fortuna – 5 miles south of the Canadian border – in June of 2012. The downturned economy caused work to slow for their family business, a gravel and excavation company, and they decided to do some work in North Dakota.

“It’s the craziest thing because we left a town of 1 million people and came to a town of 25 people, which has grown to 50, I think,” Ferris said.

They operated a gravel crushing business in North Dakota for one season, but the price of gravel dropped about 25 percent by the time they were working in the Bakken, Ferris said. As they anticipated the challenges of operating their equipment during the cold winter months, the couple sold off the equipment but decided to stay in North Dakota.

They then put the money into buying the old Fortuna school, primarily so they could park their RV in the gymnasium and out of the cold.

The school, which Ferris said last operated for grades K-8 in 1985, was structurally sound but required major work because it needed a new roof.

“It looked like something out of a horror movie,” Ferris said of the building’s interior. “It was pretty bad.”

The couple did traffic counts – counting as many as 1,000 vehicles going by in one day – and talked to people in the region about what was needed. They first decided to renovate the eighth-grade classroom and the principal’s office into a convenience store.

“After being here, we knew there was a need for something,” Lamb said.

Then they added showers for truck drivers, renovated 18 rooms for worker lodging, added spaces for RV parking and semi parking and opened the bar. They started offering homestyle cooking last November when they realized many had nowhere to go for Thanksgiving.

Lamb said while the profits were higher last year, the business is still making money. They draw customers from Crosby, Westby, Mont., Canada and a few from Williston.

“We have great, great days still,” Lamb said.

They had planned to add fuel because drivers occasionally run out of gas on their way to Canada. But for now, they’re holding off on making any new investments.

“It’s not worry-free for us, but it’s definitely ‘we’ll be fine,’” Ferris said. “When things come back, then we’ll be entrenched pretty good here and everybody knows we’re here.”

Mike Ferris serves a customer a drink at the Teachers Lounge. Amy Dalrymple/Forum News Service

Mike Ferris serves a customer a drink at the Teachers Lounge. Amy Dalrymple/Forum News Service

Audit shows mail delivery failed to keep up as Bakken boomed

WILLISTON, N.D. – A new audit shows the U.S. Postal Service in North Dakota rarely met national service standards in recent years, and high employee turnover contributed to delayed mail delivery and excessive customer wait times.

The audit by the Office of Inspector General concludes that while the Postal Service has taken action in response to the Bakken oil boom, more improvements need to be made to improve employee retention and customer service.

Some findings from the audit:

– North Dakota had a 165 percent increase in package deliveries from 2010-2014, compared with the national average of 21 percent. The number of delivery points increased 14 percent, compared with 1 percent nationwide.

– Delivery staff were overworked, with rural carrier overtime increasing 241 percent between fiscal years 2011 and 2014. Nationally, overtime increased 105 percent.

– Mail carriers in the Bakken returned from their routes after 5 p.m. as often as 56 percent of the time in fiscal years 2012 and 2013. This improved in 2014, dropping as low as 23 percent.

– While much of the audit focused on western North Dakota, it also recommends improvements to mail processing in Fargo and Bismarck and noted that the Fargo Prairiewood Station had the most instances of excessive wait times.

The audit was performed in response to a request from Sen. Heidi Heitkamp, D-N.D., who has asked residents to submit their concerns about mail delivery through her Fix My Mail campaign.

Difficulty hiring and retaining employees in western North Dakota contributed to many of the complaints raised by customers, the audit found.

Between October 2011 and September 2014, the Postal Service hired 77 carriers and transitional employees in Williston, Dickinson and Minot. Thirty-five of the carriers, or 45 percent, continued to be on the job in August 2014, the audit found.

Postal Service compensation, established through union negotiations, is not always competitive in western North Dakota, where employers in the energy field, as well as food and retail, offer higher pay, incentives and housing stipends.

Peter Nowacki, spokesman for the U.S. Postal Service, said progress has been made to improve hiring and retention of employees, including some wage adjustments. Current openings in Williston start at $19.70-$19.98 an hour, he said.

To fill in for vacant carrier positions, the Postal Service also brings in employees from other areas of the country to work detail assignments in the Bakken. The audit said there were 99 detail assignments in fiscal year 2014.

Nowacki said the Bakken currently has 55 to 60 detail assignments. In a few cases, the workers have decided to take permanent positions in North Dakota, he said.

Other improvements the Postal Service has made include opening a second post office in Williston, adding 40 more rural routes since 2011 and installing self-service kiosks.

“The Postal Service has made a number of improvements to answer the challenges created by growth in the Bakken in western North Dakota and eastern Montana,” Nowacki said. “Our commitment going forward is to keep working hard, keep working smart to provide the best possible service to our customers.”

Hearings scheduled on MDU rate increase proposal

BISMARCK – Public input sessions are scheduled next week on a Montana-Dakota Utilities request to increase natural gas rates.

MDU proposes to increase rates by 3.4 percent, costing an average residential customer $3.50 more per month.

The increase would generate $4.3 million in revenue annually. The company says the rate increase is needed to cover the cost of increased investment in natural gas facilities, which is projected to be $212 million by the end of this year.

“The bottom line is to provide safe and reliable service,” said MDU spokesman Mark Hanson.

The North Dakota Public Service Commission has up to seven months to decide on the increase request, which would affect 105,000 natural gas customers in the state.

While it’s being considered, commissioners have approved the increase to take effect on a temporary basis. If the interim rates collected exceed the final rates approved by the PSC, the company will be required to refund the excess plus interest.

MDU last applied for a similar rate increase in 2013. The PSC approved a 3.95 percent increase, but settled on an amount about $2 million less than what MDU requested. Before that, the company had not increased rates since 2004.

Adding infrastructure to keep up with growing demand is the main reason the company has needed to increase rates, Hanson said.

“It’s not just the Bakken. We have customer growth throughout our natural gas service territory,” Hanson said.

Public input sessions will be held Monday and Tuesday via interactive television from locations across the state. MDU will give a short presentation and the public can ask questions on the proposal.

Commissioners will attend and use the information to identify areas of concern to address during the formal technical hearing, which will be held on July 20.

Public input sessions will be at 7 p.m. Monday at these locations:

– Bismarck State College, VoTech Center Room 246, 1200 College Drive.

– Williston State College, Stevens Hall Room 120, 1410 University Ave.

– Dickinson State University, Klinefelter Room 220, 1679 6th Ave. W.

– Lake Region State College, Administration Room 123, 1801 College Drive N., Devils Lake.

– Minot State University, Administration Building Room 359, 500 University Ave. W.

– Valley City State University, Rhoades Room 101, 101 College St. S.W.

Sessions set for noon Tuesday will be at these locations:

– Public Service Commission Hearing Room, 12th floor of the state Capitol, Bismarck.

– Williston State College, Stevens Hall Room 120, 1410 University Ave.

– Dickinson State University, Murphy Hall Room 202, 1679 6th Ave. W.

– Lake Region State College, Administration Room 172, 1801 College Drive N., Devils Lake.

– Minot State University, Administration Building Room 359, 500 University Ave. W.

– Valley City State University, Rhoades Room 101, 101 College St. S.W.

The public will also be able to listen to the session via webcast and submit questions by email.

Access the webcast at http://education.video.nd.gov. Use the email address guest@meeting.edu and password “meeting” to log in. Questions can be submitted via email during the session to vschock@nd.gov.

For more information, contact the Public Service Commission at (701) 328-2400 or visit www.psc.nd.gov.

 

Faces of the Boom: Layoff comes nearly 25 years into oil career

Jeff LeDosquet, pictured Thursday, April 2, 2015, in Williston, N.D., is searching for a new job after low oil prices led to his layoff from Halliburton. Amy Dalrymple/Forum News Service

Jeff LeDosquet, pictured Thursday, April 2, 2015, in Williston, N.D., is searching for a new job after low oil prices led to his layoff from Halliburton. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – Jeff LeDosquet expected to celebrate 25 years in the oil industry last week.

Instead, the 51-year-old is hunting for a new job after low oil prices caused him to be laid off six weeks before hitting that milestone.

“It was quite a shock to me, really,” he said. “It caught me by surprise.”

LeDosquet, born and raised in Williston, went to work for Halliburton 25 years ago driving a cement bulk truck. He spent 11 years working for Halliburton in the field and the last 14 working in the office, most recently in sales.

“I started at the bottom and worked my way up,” LeDosquet said.

Low prices prompted oil companies to cut back on spending in North Dakota and reduce their drilling plans for this year. The state had 94 drilling rigs operating as of Friday, a level not seen since 2010.

While some aspects of the oil industry remain busy in North Dakota to support the nearly 1.2 million barrels of daily production, the Department of Mineral Resources estimates that 3,000 to 4,000 oilfield jobs have been cut in the state.

Halliburton has not publicly commented on how many North Dakota jobs have been cut, but the company did confirm that it closed its Minot facility. Other oilfield service companies including Schlumberger and Baker Hughes have made similar cuts but have not released details about the Bakken.

The unemployment rate in the Williston area is still low — 1.9 percent in February, compared with 1.4 percent in February 2014. Statewide, unemployment was 3.7 percent in February.

During his time in the industry, LeDosquet has seen a lot of up and down cycles. For the past few years, his job selling hydraulic fracturing services and other services to oil producers was busy.

“There was more work than anybody could handle,” he said.

LeDosquet also has seen previous down cycles, but during those years, he and his co-workers faced reduced hours or pay cuts rather than layoffs, which is what he anticipated would happen to him during this downturn.

Instead, he has spent the last weeks putting together a resume for the first time in 25 years and learning how to better use the LinkedIn network and other online tools to find a new job.

So far, LeDosquet has found that most oil companies are looking for truck drivers. While he does have a commercial driver’s license, going back to truck driving is not his first choice. Other companies have told LeDosquet they’re shifting people around internally and not hiring new workers.

“The waiting is nerve-wracking,” he said. “I’m sure good things are ahead and I’m just trying to stay positive and enthusiastic.”

LeDosquet, who lives with his wife, Dorca, and their youngest daughter, a high school senior, hopes to stay in Williston and continue working in the oil industry.

“I’m not giving up on the oilfield yet. I think this downturn due to the price of oil, I think it’s going to be short-lived and hopefully things will turn around and ramp up again,” he said. “That’s the way of the oilfield really. It’s always been a gamble, up and down cycles. That’s just the lifestyle.”

New rail data highlights how much N.D. crude heads east

WILLISTON, N.D. – North Dakota sends more oil by rail to East Coast refineries than all other areas of the country combined, says new data from the Energy Information Administration.

The United States now ships more than 1 million barrels of oil per day by rail, with the Bakken accounting for about two-thirds of of it, compared with 55,000 barrels per day in 2010. The shipping increase, said the federal agency, is more than a 1,700 percent increase, including some shipments to Canada.

Rail shipments of Bakken crude to the East and West coasts have steadily increased while rail shipments to Gulf Coast refiners have declined, the EIA information shows.

North Dakota officials have known that more and more oil is heading by rail to coastal refineries, particularly the East Coast, but complete details had not been available before. The EIA compiled the data released this week using information from the U.S. Surface Transportation Board, Canada’s National Energy Board and EIA survey data.

“This is the first time we’ve had some hard data to look at and confirm that,” said Justin Kringstad, executive director of the North Dakota Pipeline Authority.

In January, producers in the Bakken shipped an average of 437,000 barrels of oil to East Coast refineries by rail every day, or roughly the equivalent of 6½ trains each day.

West Coast refineries received an average of 171,000 barrels a day of Bakken crude by rail, or about 2½ trains, in January.

Market conditions are the primary reason that Bakken crude heads east and west as producers look for the best price for their barrels, Kringstad said.

The East Coast, a major consumer of crude oil with refineries set up for the Bakken’s light, sweet crude, lacks pipelines to transport the crude, he added.

Gulf Coast refineries received about 57,000 barrels per day of Bakken crude by rail in January, the EIA data shows. Bakken crude had been heading by rail to the Gulf Coast in much higher quantities in the past, hitting a peak of more than 290,000 barrels per day in March of 2013.

Kringstad said the combination of rising oil production in Texas plus new pipelines contribute to that trend.

Midwest refineries received about 40,000 barrels per day of Bakken crude by rail in January, and Canadian refineries received about 28,000 barrels per day by rail.

The volumes shipped by rail from the Bakken to Canada tend to fluctuate widely from month to month, the EIA data shows.

More than 730,000 barrels of oil, enough to nearly fill 11 trains a day, left the Bakken in January.

North Dakota shipped 58 percent of its crude by rail in January, according to the North Dakota Pipeline Authority. That percent, which had been as high as 75 percent last year, varies each month depending on market conditions.

For more information, check out the graphics here.

New rules take effect for Bakken crude, but will they improve safety?

WILLISTON, N.D. – New rules for conditioning Bakken crude oil take effect today, but will they improve the safety of transporting crude by rail?

The industry and state regulators say yes.

Critics say no.

And a scientist researching the issue says we don’t know yet.

So how is the public supposed to make sense of it all? We’ll try to break it down.

What is the new oil conditioning order?

Starting today, oil companies in North Dakota will be required to remove more volatile gases from Bakken crude oil so it has a vapor pressure of no greater than 13.7 pounds per square inch.

Oil conditioning occurs at the well through equipment that separates the oil, gas and water. Companies can meet the new standard by operating their equipment at specific pressures and temperatures. If they choose an alternative method, companies will need to submit documentation that shows they are meeting the standard.

How was 13.7 chosen?

The independent standards organization ASTM, formerly American Society for Testing and Materials, defines stable crude oil as having a vapor pressure of 14.7 psi. Equipment that tests for vapor pressure has a margin of error of 1, so state regulators chose 13.7 to ensure that it meets the definition, said Alison Ritter, spokeswoman for the Department of Mineral Resources.

Will a vapor pressure of 13.7 make Bakken crude safer in the event of a train derailment?

We don’t know yet, says Chad Wocken, senior research manager with the University of North Dakota’s Energy and Environmental Research Center. More research is needed to understand what properties in Bakken crude cause it to be so volatile, he said.

“We don’t really know what vapor pressure would allow a current rail car to transport crude safely,” Wocken said.

The EERC plans to participate in a Department of Energy study that would further investigate the characteristics of Bakken crude to understand what causes the massive fireballs that have resulted from recent train derailments.

While the vapor pressure is one indicator, Wocken said other factors also need to be analyzed. If the study is funded, it could occur later this year or next year, Wocken said.

“Trying to understand how all these crude oil properties really impact behavior in an accident setting is something that really needs to be studied,” Wocken said.

Then what does the order accomplish?

For the first time, it ensures that Bakken crude meets a consistent standard. State regulators consider it one step toward making rail transportation of Bakken crude oil safer, Ritter said. Other key areas include improving track maintenance, stronger rail cars and new federal Department of Transportation rules, she said.

“When you know what’s in the cars, you can design a better, safer car,” Ritter said.

The order could be amended if new research points to a different vapor pressure guideline, Ritter said.

“We are using the best science that we have available,” she said.

Is the industry ready?

Yes, said Kari Cutting, vice president of the North Dakota Petroleum Council, who estimates companies have spent $20 million on equipment to comply with the order. The new requirement also will cost the industry an estimated 10 cents to 20 cents per barrel, or $120,000 to $240,000 a day based on daily oil production of 1.2 million barrels per day, she said.

How will it be enforced?

Department of Mineral Resources field inspectors will check the pressure and temperature settings during routine well inspections, which are supposed to occur quarterly, Ritter said. Violations can lead to civil or criminal penalties.

What do critics say?

Ron Schalow of Fargo, an outspoken critic of rail transportation of Bakken crude, said he can’t get officials to tell him how many fewer fatalities will result from this new order.

“There’s going to be more derailments, and the same thing is going to happen,” Schalow said. “I think they devised something that would make it look like they were doing something, but they avoided what they really needed to do, which was stabilization.”

Does the order allow for stabilization or other technology?

Companies could request a hearing with the North Dakota Industrial Commission if they want to adopt another process to condition the oil, including stabilization, which safety advocates often mention but is not required by the state.

But if the companies pursue stabilization, they also would need to have additional pipelines and stabilization facilities in place to handle the additional light hydrocarbons that are removed during the process, Ritter said.

So far no companies have requested hearings for an alternative technology, she said.

More research is still needed to determine if stabilization would make rail transportation of Bakken crude safer, Wocken said.

What other consequences will this order have?

The new order is expected to increase natural gas flaring by 2 percent because of the additional gases that are removed from the oil, Ritter said.

That will put additional constraints on operators who are already trying to meet new requirements from the Industrial Commission to reduce flaring.

“We’re literally burning the candle at both ends,” Ritter said.

The department estimates that companies will restrict oil production by 12,000 barrels a day to comply with the oil conditioning order and another 12,000 barrels a day to comply with flaring guidelines also in effect, Ritter said.

 

Marred by recent spill, pipeline company outlines next project

CROSBY, N.D. – The Public Service Commission pressed a pipeline company for details Monday about how it would detect spills in a proposed crude oil pipeline in northwest North Dakota.

Meadowlark Midstream, the company under investigation after a massive saltwater pipeline leak near Williston, is seeking permission from state regulators to proceed with a new project.

The company proposes to construct a 46-mile steel pipeline to carry oil from its pump station southeast of Fortuna to the Basin Transload Rail Facility southeast of Columbus.

The pipeline would initially carry 20,000 to 25,000 barrels per day and could increase to 50,000 barrels per day, said John Millar, a vice president for Summit Midstream, the parent company of Meadowlark.

The rail facility, which ships Bakken crude to East Coast refineries, currently receives most of its shipments by truck, Millar said. The pipeline would not eliminate truck traffic, but it would reduce how far the trucks have to travel to get oil to the rail facility, he said.

Commissioners and staff with the PSC referenced Meadowlark’s recent saltwater pipeline break north of Williston that spilled nearly 3 million gallons of brine adjacent to Blacktail Creek. The Department of Mineral Resources and the North Dakota Department of Health are investigating the spill, the largest of its kind in state history.

The company has done a lot of work since that spill was discovered Jan. 6 to better prevent and detect spills, Millar said.

“We’re really focused on that right now, I can assure you,” Millar said.

The proposed crude pipeline would be equipped with technology so it could be remotely monitored around the clock from a control center in Texas, Millar said.

Block valves at each end of the pipeline could be controlled remotely from that operations center. The pipeline also would have six intermediate block valves that could be shut down manually, Millar said.

“You indicated that someone could get there very quickly. What’s very quickly?” asked Zack Pelham, legal counsel for the PSC.

Millar said the company has two staff members in Divide County with plans to add a third. He estimated they could likely respond in 15 minutes.

In addition, the pipeline would be monitored through aerial inspections every two weeks and routine foot patrols, Millar said.

Commission Chairwoman Julie Fedorchak asked the company to submit details about how many staff are dedicated to monitoring North Dakota pipelines from the Texas control center.

The PSC also took testimony from several members of the public. Evan Whiteford, a representative of the Great Lakes Organizing Committee of North Dakota/Minnesota Laborers’ union, testified about concerns he’s observed about the quality of the work in another Summit project.

Whiteford told commissioners the deficiencies he observed by another subcontractor made him question of quality of Summit’s environmental work.

Clint McKinney, who works for B&G Oilfield Service, testified that he’s worked for Summit on other projects and the company employs an environmental consultant to monitor that the work is up to par.

“They are cracking down,” McKinney said.

Fedorchak estimated the PSC would make a decision by mid-April. Meadowlark would like to begin construction on the $33 million project in May and estimates construction would take most of this year.

The PSC also is considering another application from Meadowlark for a smaller crude oil pipeline in Williams County.

 

Manufacturers trying to find their niche in oil industry

WILLISTON, N.D. – A product a North Dakota manufacturing company began making for one oil customer is now exported to several states.

The success story of a product from Steffes Corp., with locations in Dickinson and Grand Forks, served as an example this week for regional manufacturers trying to break into the oil and gas business.

Steffes, which eight years ago began making tanks and walkways for the oil industry instead of ag hopper bins, had one customer that wanted a better flaring system, said Todd Mayer, new product development and sales manager.

Steffes developed a natural gas flaring system that burns cleaner, with less volatile organic compounds released into the air, and the company anticipated the customer would order one or two a month, Mayer said during a Manufacturing and Logistics Conference held in Williston.

The company never marketed the product, but word of mouth prompted demand for the flaring system to spread. Steffes now sells it to other companies in North Dakota as well as Texas, Colorado, Wyoming and New Mexico, Mayer said.

Manufacturing companies from the region, including several from eastern North Dakota, attended the conference to learn how they, too, could make products for the oil and gas industry.

“I would say there’s very little that we can’t make here,” said David Lehman, manufacturing engineering extension specialist with North Dakota State University.

The event served as the launch of a new initiative from Williston Economic Development to reduce costs for companies operating in the Bakken by offering more products and services locally.

But it can be challenging for local manufacturers to get a foot in the door with oil companies, which typically make purchasing decisions at the corporate level.

Economic Development Director Shawn Wenko said his office will lead an in-depth study to understand the challenges the oil companies face and identify opportunities for manufacturers.

Oil industry representatives said during the conference that delays getting equipment or parts shipped in from other states often create costly delays.

“Time is money,” said Dave Ruffie, production foreman for Continental Resources.

North Dakota manufacturers have increased how much oil and gas business they’re doing over the past five years, Lehman said. But there’s room to do a lot more.

“What we’re doing is a fairly small percent of the entire supply chain,” Lehman said.

TrueNorth Steel, with corporate headquarters in Fargo, has produced oilfield tank products since the 1980s, said sales manager Scott Johnson. The company tries to stay innovative by spending time in the field to see what’s working and what’s not.

“It’s a lot more expensive to fix problems in the field than it is in our factory,” Johnson said.

In addition to oilfield tanks and catwalks, TrueNorth produces a steel containment system to contain oilfield spills that takes less time to install in the field than competing products, Johnson said.

Other North Dakota companies have begun doing oilfield work more recently.

Brad Odegard, owner of FlexTM in Wahpeton, said he first explored opportunities in the Bakken in 2011, spending the night in the Williston Walmart parking lot because he couldn’t find a hotel room.

Odegard said he found business in the Bakken by listening to what the challenges were and seeking expertise from the industry. One company representative in Denver was impressed that they could do weekly deliveries to the Bakken, he said.

Dana Wiertzema, sales manager for AIM Machining in Wahpeton, said for the past few years the company has manufactured products and reworked tools used by the oil industry. Some of company’s success has come from attending national oil conferences and reading trade magazines to find ideas, he said.

Attendees at the conference said they think the low oil prices and a slowdown in agriculture manufacturing provide opportunities for the two industries to work together.

“In the middle of the economy that’s slowing down, there’s opportunities,” Wiertzema said. “Why can’t we be part of that next success story?”