N.D. ‘large trigger’ oil tax cut won’t take effect

BISMARCK – The oil tax cut known as the large trigger will not take effect on Monday, causing the state to collect about a half billion dollars more this year than legislators budgeted.

The exemption would have taken effect next month if the price of West Texas Intermediate crude oil at Cushing, Okla., averaged below $55.09 a barrel for a fifth consecutive month in May. The trigger would have lowered the state’s oil extraction tax from 6.5 percent to 4 percent for existing wells and exempted new wells entirely for 24 months.

But oil prices rebounded in May, and the tax cut that loomed over the past legislative session will not take effect.

“Given that oil has been trading mostly in the upper 50s, well above $55.09, we will not be triggering,” State Tax Commissioner Ryan Rauschenberger said Friday.

Legislators built state budgets around a forecast that included the large trigger kicking in, with an estimated tax impact of about $80 million a month.

Ron Ness, president of the North Dakota Petroleum Council, said companies had been making plans to ramp up activity in June if the large trigger had taken effect.

“I think it’s a fairly significant blow to industry,” Ness said. “It would have been a good stimulus.”

An increase in oil activity would have benefited the state through more jobs and sales tax income, Ness said.

If oil prices decline again, there is still a chance that the large trigger could take effect in November. But a bill approved by legislators this past session makes the large trigger expire on Nov. 30.

“One month would essentially be a blip in the radar,” Rauschenberger said of the potential revenue impact.

Another state tax incentive known as the “small trigger,” which took effect Feb. 1, reduces the oil extraction tax from 6.5 percent to 2 percent for the first 75,000 barrels produced.

The small trigger incentive prompted more wells to be completed in March, Ness said. That incentive is set to expire on June 30, giving operators one more month to take advantage of the incentive.

Starting Jan. 1, the oil extraction tax will permanently decrease from 6.5 percent to 5 percent under legislation approved this past session. The gross production tax will not change, bringing the state’s overall tax on oil from 11.5 percent to 10 percent next year.

EPA involved in 2014 pipeline leak investigation

MANDAREE, N.D. – The Environmental Protection Agency is investigating whether Crestwood Midstream violated the Clean Water Act last year when a pipeline spill leaked about 1 million gallons of brine on the Fort Berthold Indian Reservation.

The EPA has issued Crestwood Midstream and Arrow Pipeline a Notice of Potential Violation for the July 2014 pipeline spill near Mandaree.

The notice states that the brine flowed in a stormwater ditch and then a ravine before entering an unnamed tributary and traveling about a mile north through a series of beaver dams before reaching Bear Den Bay of Lake Sakakawea. Lake Sakakawea and its tributaries are waters of the United States.

The EPA has not made a final determination.

Crestwood Midstream also received a grand jury subpoena this year regarding the spill from the North Dakota U.S. Attorney’s Office, according to notes to financial statements Crestwood filed with the Securities and Exchange Commission this month.

Chris Myers, acting U.S. attorney, did not return calls seeking comment.

The company reported two other smaller pipeline spills last year, totaling about 168,000 gallons of brine, as well as another pipeline spill reported May 7 near Mandaree. The tribe has estimated the latest spill at 220,000 gallons, but the spill report to the North Dakota Department of Health included an estimate of up to 336,000 gallons.

Crestwood Midstream did not respond to a request for comment.

Lynn Helms, director of the North Dakota Department of Mineral Resources, commented on the Crestwood saltwater gathering system last week during his monthly update on oil production, saying the system has “substantial problems.”

Helms said the pipeline system was installed in 2010, prior to new rules taking effect that allow the state to regulate gathering pipelines. Because the pipeline is at Fort Berthold, it falls under the jurisdiction of multiple agencies and the Three Affiliated Tribes environmental division has taken the lead on it, Helms said.

Edmund Baker, environmental director for the Three Affiliated Tribes, did not return a call seeking comment.

ND oil production up 1 percent in March

WILLISTON, N.D. – Fracking crews were busy in North Dakota in March, bringing the month’s oil production up 1 percent to just under 1.2 million barrels per day and surprising state regulators.

Lynn Helms, director of the Department of Mineral Resources, said Wednesday he anticipated another drop in oil production due to low prices, but operators completed an estimated 189 new wells in March, preliminary figures show.

North Dakota has been seeing an increase each month in the number of wells waiting on hydraulic fracturing crews – coined a “fracklog” – as operators wait for oil prices to rebound.

But that number decreased from 900 to 880 in March, likely a result of the state tax incentive known as the small trigger and the need for companies to maintain some cash flow, Helms said.

The state had 12,439 wells operating in March, the preliminary figures show, which is an all-time high.

Four companies – Hess Corp., Continental Resources, XTO Energy and Burlington Resources – made up the bulk of the new wells that were completed in March, Helms said. But companies EOG Resources and Marathon Oil have indicated they plan to hold off completing new wells as long as they can, he said.

Helms said he expects oil production to hold steady between 1.1 million barrels a day and 1.2 million barrels per day until mid-2016, unless oil prices exceed $65 or $70.

“It looks like a pretty flat picture as we project out until this time next year,” Helms said.

The number of drilling rigs operating in the state was 83 Wednesday, a 10 percent drop since April and the lowest number since January 2010. The record was 218 in May of 2012.

“We think we’re at or near the bottom,” Helms said.

Natural gas production increased 3 percent in March, but the percent of natural gas flared during the month was unchanged at 19 percent. About 10,000 barrels a day of oil production was curtailed in March so companies could meet gas capture targets set by the North Dakota Industrial Commission, the department said.

Helms said he thinks the state’s new rule to condition Bakken crude oil made a difference in last week’s oil train derailment near Heimdal. In that case, Hess Corp. submitted a test that showed the vapor pressure of the oil was 10.8 pounds per square inch when it was loaded in Tioga.

The order, which took effect April 1, requires companies to treat crude oil so it has a vapor pressure of no more than 13.7 pounds per square inch.

“We do think it helped,” Helms said. “I think if you compare the video and the photographs from Casselton to Heimdal, you see a different character to the derailment and the following fire.”

A vast majority of operators are complying with the new rules, but regulators have not yet had time to verify whether about 4,000 wells are in compliance, Helms said.

Companies can meet the standard by operating their equipment at specific pressures and temperatures. If they choose an alternative method, companies need to submit documentation of a vapor pressure test each quarter.

Operators of about 2,600 wells plan to submit tests to the Department of Mineral Resources. So far, regulators have reviewed more than 2,500 tests and all but eight, or more than 99 percent, were in compliance, Helms said.

“It’s a little bit overwhelming when you look at the amount of data they’re processing,” Helms said.

For another 9,800 wells, the Department of Mineral Resources will verify each quarter that equipment is being operated at the right pressures and temperatures. So far, inspectors have reviewed just under 5,800 sites, or about 60 percent, Helms said. Of those, 90 percent were in compliance, he said.

Those that are out of compliance are given 48 hours to adjust equipment and retest, he said.

The amount of crude oil transported by rail out of North Dakota fell slightly in March to below 700,000 barrels per day, according to estimates from the North Dakota Pipeline Authority. About 54 percent of oil was transported by rail while 40 percent was transported by pipeline.

Director Justin Kringstad attributed the decrease in rail transportation to a drop in oil production in Montana, which he said has no active drilling rigs, a decline in the amount of oil being trucked in from Canada and the Double H Pipeline which recently went into service.

Heitkamp co-sponsors bill to lift ban on U.S. crude oil exports

WASHINGTON – U.S. Sens. Heidi Heitkamp, D.-N.D., and Republican Lisa Murkowski of Alaska plan to introduce a bipartisan bill today to lift the ban on American crude oil exports.

Heitkamp, in an interview Tuesday with Forum News Service, called the 1970s-era ban “antiquated” and said it inhibits American competitiveness.

“We believe the time has come for Congress to weigh in and protect our energy renaissance,” Heitkamp said.

North Dakota would benefit from lifting the ban because U.S. refiners that can process light, sweet crude oil such as Bakken crude are maxed out.

“There is a desperate need to open up the international markets for North Dakota crude,” Heitkamp said.

Sen. John Hoeven, R-N.D., also joined the senators in introducing the bill.

“Lifting the decades-old law banning U.S. producers from selling their product on the world market will help produce more energy, grow our economy and create more jobs, both in North Dakota and across the nation,” Hoeven said in a statement.

Other sponsors are Sens. John Barrasso, R-Wyo., John McCain, R-Ariz., Bob Corker, R-Tenn., Lamar Alexander, R-Tenn., James Risch, R-Idaho, Jeff Flake, R-Ariz., Shelley Capito, R-W.Va., Jim Inhofe, R-Okla., Marco Rubio, R-Fla., and James Lankford, R-Okla.

The proposed legislation seeks to authorize crude and condensate oil produced in the U.S. to be exported on the same basis as petroleum exports. It includes a provision that would allow the president to prohibit oil exports for reasons of national security.

Heitkamp said she and Murkowski, the ranking member on the Senate Committee on Energy & Natural Resources who toured the Bakken in the fall of 2012, are working to build bipartisan support for the legislation.

In addition to opening up U.S. crude to new markets, lifting the ban would promote energy security for the U.S. and its allies, Heitkamp said.

“It would also encourage our friends and allies to import or leverage American oil to lessen the influence and dominant energy positions of unstable countries like Iran, Russia, or Venezuela,” Heitkamp said while speaking on the Senate floor earlier this month. “We have a real opportunity to make a needed change that supports our country, our economy and our security.”

North Dakota state legislators urged members of Congress to lift the export ban in a concurrent resolution they approved during the recent session. Legislators directed that the resolution be sent to every member of Congress.

Faces of the Boom: Texas couple finds new opportunities in Oil Patch after slowdown

Daisy and Erik Delaney, pictured Friday, May 8, 2015, in Crosby, N.D., moved from Texas to work in North Dakota's oilfields, but the oil slowdown prompted them to take jobs as a truck driver and mechanic for Divide County. Amy Dalrymple/Forum News Service

Daisy and Erik Delaney, pictured Friday, May 8, 2015, in Crosby, N.D., moved from Texas to work in North Dakota’s oilfields, but the oil slowdown prompted them to take jobs as a truck driver and mechanic for Divide County. Amy Dalrymple/Forum News Service

CROSBY, N.D. – Low oil prices forced Daisy Delaney to park her truck in January after she had been hauling water in the Bakken oilfields for about a year.

But she wasn’t ready to say goodbye to North Dakota.

She instead went to work hauling gravel for Divide County, where her husband, Erik, also works as a mechanic. The couple moved from Texas to Crosby last year in search of high-paying oilfield jobs, but even though activity has slowed they say it’d be hard to leave their new town.

“I don’t know about the rest of the oil industry, how they feel about the towns they’re working in, but Crosby is really a small town, hometown, good people, very welcoming,” Daisy said. “So you get attached to the people, you get attached to the town, you get attached to the lifestyle.”

It’s a reversal of a trend for Divide County, which used to have a revolving door of employees, especially truck drivers, who would leave county jobs for higher-paying oilfield jobs, said Bryan Haugenoe, road superintendent for Divide County.

Now the county – which has three active drilling rigs, compared with 15 that were operating in the county in 2013 – gets inquiries from oilfield workers who are looking for jobs.

“Right now we’re kind of full,” Haugenoe said.

Erik Delaney, who joined Daisy in North Dakota last summer, first worked for a pipeline company before finding a job he liked better, working as a mechanic to service all of the county’s vehicles.

Erik, a former racing instructor and native of Louisiana, appreciates working in a new shop with heated floors.

“I love it. I’m spoiled,” he said.

Daisy, originally from Wyoming, had been an over-the-road truck driver and wanted to take on the challenge of being a woman in the oilfield. She worked long hours, living out of her truck for the first six months, hauling water to and from drilling sites and other locations around Crosby, Williston, Watford City and Sidney, Mont.

She and Erik took two weeks off in October to go back to Texas to get married.

“And thank God for the North Dakota oilfields, because that’s what funded the wedding,” Daisy said.

They live in an RV in Crosby, and although Erik struggled through his first winter, the couple says housing prices are still too high for them to find something more permanent in North Dakota.

Daisy isn’t shy about saying she’d rather be go back to the oilfield if she can, calling her job hauling gravel “mind-numbing.”

“It’s the same mundane circle over and over,” she said.

But she likes getting rain days, when she’ll work in the shop with Erik, and not having to share a bathroom with all the male truck drivers.

“It’s a really nice job. They take really good care of us here.” Daisy said. “We had to go with what our opportunity was at the time, and I think it was probably the smartest move we made.”

 

Tribal members decry sewage dumping; disposal company calls it a misunderstanding

MANDAREE, N.D. – Members of the Three Affiliated Tribes are upset about sewage that was applied to land in a recreation area near Lake Sakakawea, but the owner of the company involved says it’s a misunderstanding and not a case of illegal dumping.

Tribal member Walter DeVille confronted the driver of a sanitation truck on Monday evening when he noticed the driver near Hale Marina east of Mandaree and thought it looked suspicious.

DeVille reported the incident to tribal authorities and videotaped his conversation with the driver, which became popular this week on Facebook sites including the Bakken Oilfield Fail of the Day.

The driver for BBS Services Inc., also known as Bakken’s Best Sanitation, had applied wastewater from portable toilets to land in the area. Owner James Tanski said the company had permission from a landowner to apply the waste in that area and had done so three times in the past two years, with the waste treated in accordance with state standards.

But landowner Donita Hale said the family never gave such permission, and said the primitive recreation area is a popular spot for celebrating July 4 as well as for ceremonial purposes.

“They just have no respect for anything, the land or anything,” Hale said.

DeVille estimated that the waste was about 1,000 yards from Lake Sakakawea and was on a hilltop. He said Mandaree community members use the area for fishing, hunting and recreation.

“Why would you want feces and whatnot to be littered all over your recreational site?” DeVille said.

BBS Services is licensed by the North Dakota Department of Health for land application of septic waste, said Karl Rockeman, director of the Division of Water Quality. But BBS was fined by the state last year for operating without a permit and for improperly disposing of septic waste off the Fort Berthold Indian Reservation, health department records show.

Rockeman said he heard from the owner after the video was posted online and the owner’s explanation of how the waste was treated and the setback from water sources follows the state’s requirements. Health officials plan to work with the tribe’s environmental division to follow up, Rockeman said.

“The fact that they did call us even before we saw the posting to let us know that something had happened shows that they’re being proactive,” Rockeman said.

But the health department does not have jurisdiction on the reservation or a role in determining whether the company had proper permission to operate there.

Tanski said he thought having permission from the landowner and the health department was adequate and did not investigate if he needed tribal permission.

“We didn’t know any of the laws,” Tanski said. “We should have looked into it.”

BBS also did not have an agreement in writing from the landowner. Tanski said a member of the Hale family waved down his driver a couple of years ago and offered to allow the company to apply waste to the land in exchange for servicing their portable toilets in the summer.

But Donita Hale disputes that such a verbal agreement with her family ever existed.

Tribal authorities are investigating, but representatives were unavailable for comment Friday because they were responding to a pipeline leak, also in the Mandaree area.

Tanski said he’s offered to remove the waste, but the tribes refused and instead will have a third party clean it up with BBS footing the bill. Tanski said he’s anticipating BBS will receive a fine from the tribes as well, but he insists the incident was a misunderstanding.

“We don’t want to harm the environment,” Tanski said. “We definitely weren’t trying to do anything illegal.”

State health department documents show BBS agreed to pay a $1,500 fine last year for violations that included improperly dumping septic system waste on N.D. Highway 1804 east of Williston in August 2014 and for failing to report the spill. BBS, based in Stanley, also operated in North Dakota without a proper permit for more than 1½ years, from January 2013 to August 2014.

Tanski also owns Brent’s Biffies and Septic in Duluth, Minn.

Oil on derailed train had vapor pressure well below state rules

TIOGA, N.D. — The oil on the train that derailed near Heimdal on Wednesday had a vapor pressure substantially lower than the standards in North Dakota’s new oil conditioning order, a Hess Corp. spokesman said Thursday.

Hess, which owned the railcars that caught fire in Wednesday’s derailment, has been in compliance with the state’s rules, said Alison Ritter, spokeswoman for the Department of Mineral Resources.

The railcars were loaded at the company’s Tioga Rail Terminal, Hess spokesman John Roper said.

Documentation obtained by the Department of Mineral Resources shows that oil loaded Wednesday at the Tioga facility had a vapor pressure of 10.83 pounds per square inch.

The state’s conditioning order that took effect in April requires oil to be conditioned so it has a vapor pressure no greater than 13.7 pounds per square inch.

Oil from the Tioga rail facility has tested at 12.44 psi, 11.08 psi and 11.18 psi, according to April tests submitted by Hess to the Department of Mineral Resources.

“So far everything has been in compliance,” Ritter said.

The conditioning order aims to reduce the volatility of Bakken crude oil so that it is similar to unleaded gasoline, Ritter said.

Six cars derailed Wednesday morning near Heimdal, 80 miles southeast of Minot, with four cars catching fire.

“By all accounts, it looked like a much different scene than Casselton as far as the fire and the intensity of the fire,” Ritter said.

The volatility of Bakken crude has been examined closely in the wake of explosive derailments in Casselton and elsewhere in North America in recent years.

In January 2014, after the Casselton explosion, the Pipeline and Hazardous Materials Safety Administration issued a safety alert to warn emergency responders and the public that Bakken crude may be more flammable than traditional heavy crude oil.

About 99 percent of the vapor pressure tests that have been submitted since the new oil conditioning order took effect have been in compliance, the Department of Mineral Resources has said. Those that are out of compliance are given 48 hours to adjust equipment and retest.

Roper said Hess is standing by to provide assistance to BNSF Railway on the emergency response.

Hess owns nearly 1,000 railcars that were purchased in 2011, Roper said. All of the cars are CPC-1232 cars, he said.

Hess does not own any DOT-111 cars, which were involved in the derailments in Casselton as well as a deadly derailment in Quebec.

“We were the first in the Bakken to have a whole new fleet,” Roper said.

The tank cars involved in Wednesday’s derailment were unjacketed CPC-1232 cars, said Michael Trevino, a spokesman for BNSF.

The CPC-1232 has a half-inch shell plus top and bottom fitting protection, while the DOT-111 car has a 7/16 shell, Trevino said.

It took the National Transportation Safety Board until April, 15 months after the Casselton derailment, to release documents related to the Casselton incident. The agency concluded that a better inspection of old tank car axles might have prevented the collision of the soybean train and the oil train.

Last week, the United States and Canada announced new safety rules for trains carrying oil, including a rapid phaseout of older tank cars. The DOT-111 cars will be phased out within three years and CPC-1232 cars without reinforced hulls – the ones involved in the latest derailment – will be phased out by 2020.

Other rules include restricting the speed of oil trains to a maximum of 50 miles per hour and requiring electronically controlled pneumatic brakes that trigger all axles simultaneously.

Drill tests pipeline company spill skills

Stacy Frerich, center, an Enbridge environmental analyst based in Wisconsin, works at her computer in the incident response center at the Grand Hotel in Minot during an Enbridge training exercise Wednesday May 6 2015.

Stacy Frerich, center, an Enbridge environmental analyst based in Wisconsin, works at her computer in the incident response center at the Grand Hotel in Minot, N.D., during an Enbridge training exercise Wednesday, May 6, 2015. Andrew Cullen/Forum News Service

TOWNER, N.D. – Enbridge employees simulated a worst-case scenario Wednesday to practice how they would respond to an oil spill in the Souris River.

The simulated exercise that employees learned of at 10 a.m. Tuesday was that an excavator struck one of Enbridge’s crude oil pipelines and released 800 barrels – or 33,600 gallons – of oil into the Souris River near Towner.

Another 1,000 barrels, or 42,000 gallons, of oil released onto farm fields adjacent to the river, under the practice scenario.

About 100 Enbridge employees participated in the full-scale exercise Tuesday and Wednesday that included a team of responders at an incident command center in Minot and others deploying equipment in the river that would be used to contain an actual spill.

“We want to make sure that we operate our pipeline in the safest manner possible and if something happens, we’re able to respond,” said Art Haskins, emergency response coordinator for the North Dakota region of Enbridge.

Workers at the scene northwest of Towner practiced with equipment that’s used to skim oil off the top of water. They also deployed containment booms that would prevent the spill from getting farther downstream.

Participants in an Enbridge oil spill response exercise observe how workers would place booms in the river and use equipment to skim oil off the top of the Souris River in Towner, N.D., on Wednesday, May 6, 2015. Amy Dalrymple/Forum News Service

Participants in an Enbridge oil spill response exercise observe how workers would place booms in the river and use equipment to skim oil off the top of the Souris River in Towner, N.D., on Wednesday, May 6, 2015. Amy Dalrymple/Forum News Service

Enbridge, the company proposing the Sandpiper pipeline, routinely does these types of drills on all of its pipelines, officials said.

That project to pipe oil from Tioga, N.D., to Superior, Wis., has been met with concerns from Minnesotans who fear an oil spill in the state’s northern lakes.

Enbridge has never had an oil spill in North Dakota like the one they practiced for this week, Haskins said. However, a pipeline leak in an Enbridge line in Michigan spilled more than 1 million gallons of oil into the Kalamazoo River in 2010.

In North Dakota, employees do about 19 drills per year, and a full-scale exercise like this event every three years, Haskins said.

“The more you practice, the better that you’re going to respond to that emergency,” Haskins said.

Local first responders, including sheriffs and firefighters, as well as the North Dakota Department of Health, Environmental Protection Agency and local emergency managers also observed or participated in the exercise.

“An emergency is not the time to meet somebody,” Haskins said. “We want to meet them before this happens so that when something does happen that we’re ready and prepared to work with them.”

Mountrail County Emergency Manager Don Longmuir, who responded to a 20,600-barrel oil spill that resulted from a pipeline break near Tioga in 2013, said he was impressed with the exercise.

“It was reassuring to see how well trained and ready Enbridge is if something would happen,” Longmuir said.

The Pipeline and Hazardous Materials Safety Administration, the federal agency that regulates major crude oil pipelines like the ones Enbridge operates, requires a certain number of drills each year, which Enbridge officials said they exceed.

Rep. Larry Bellew, R-Minot, was among those who toured the simulation site Wednesday.

“I just want to see how it works if there was a real-life emergency how Enbridge would respond,” Bellew said. “It’s nice that they’re prepared.”

Investors lost $62 million on Bakken housing scheme

WILLISTON, N.D. – A Ponzi scheme that promised investors high rates of return on North Dakota oilfield housing defrauded hundreds of investors worldwide out of $62 million, the U.S. Securities and Exchange Commission said in documents filed Tuesday.

The SEC filed a complaint in U.S. District Court against North Dakota Developments LLC, Robert L. Gavin and Daniel J. Hogan, who are alleged to have bilked investors since 2012 for Bakken housing projects that were never finished.

Gavin, who owns 80 percent of the business, is a resident of Kuala Lumpur, Malaysia, and Hogan, who owns the remaining 20 percent, is a resident of the United Kingdom, court records say.

The scheme took advantage of the international fascination with the North Dakota oil boom, said Michael Daley, enforcement attorney for the North Dakota Securities Commission, which is working with the SEC.

“The hook here was that there was inadequate housing and these housing developments, many hotels, man camps, would be very lucrative,” Daley said. “They were targeting individuals looking for high rates of return and touting that it was low-risk, but obviously that didn’t turn out to be the case.”

North Dakota Securities Commissioner Karen Tyler also took action, ordering Gavin and Hogan to cease and desist from engaging in fraudulent practices involving the sale of investments in Bakken oilfield housing.

Investigative records indicate 980 investors from 66 countries invested more than $62 million through Gavin, Hogan and sales agents located in the United States and several other countries, according to a press release from the North Dakota Securities Commission.

No North Dakota investors have been identified, Daley said.

Investors were sold interests in six different housing developments in western North Dakota and eastern Montana, promised rates of return as high as 42 percent in the first year, the North Dakota Securities Commission said.

Only one of the six developments, Great American Lodge Watford West in McKenzie County, was partially completed and operational, Daley said.

Gavin and Hogan touted the “success” of that project, failing to disclose to investors that the project began experiencing delays and operational problems in fall of 2013. Although millions were invested, there is significant work remaining on all of the housing projects and North Dakota Developments had less than $100,000 in its operating account, court records say.

One investor, a 35-year-old civil engineer from California, wrote in a document filed in court that he was learned about North Dakota Developments in the summer of 2014 while researching Bakken real estate opportunities. He and his wife agreed to invest more than $75,000 in a hotel project planned to open in Parshall by 2015. He was offered “rental assurance,” or 20 percent of his purchase price annually, and 110 percent of the purchase price within three years.

However, the man became concerned in January when he learned that construction had not started and requested his money back, but was denied.

The court complaint alleges Gavin and Hogan misappropriated investor assets to make Ponzi-like payments to earlier investments and to pay commissions of up to 20 percent to sales agents that were not disclosed to investors. Court records also say the investor assets were diverted to unrelated projects owned by Gavin and Hogan and for personal expenses such as meals, alcohol and entertainment.

U.S. District Court Judge Daniel Hovland granted a request for a temporary restraining order to freeze the assets of North Dakota Developments, Gavin and Hogan, which includes assets in the United Kingdom and Malaysia. A court hearing is scheduled for May 18 in Bismarck.

 

The U.S. Securities and Exchange Commission’s Office of the Investor Advocate can be found at http://www.sec.gov/investorad.

The North Dakota Securities Department can be reached at (701) 328-2910 or (800) 297-5124.

 

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.