American Oil and Gas Reporter - June 2017 - 32

Tough Decisions
Even with the additional extraction
tax revenue, North Dakota legislators
were faced early in the session with a
budget deficit of $595 million. That
amount eventually was trimmed to less
than $65 million, according to published
reports. The final budget bill, HB 1015,
put 2017-18 state spending at $13.6
billion, down from $14.4 billion in the
2015-16 budget.
Ness observes that after several years
of growth driven by Bakken development,
the state this year was forced to cut costs
and trim programs. "Downsizing, especially after years of expansion, is always
tough," he reflects. "Our state will come
out better for having to tighten its belt.
We can see how our industry came out
of the downturn stronger and smarter.
"When things are good, there are cries
to spend everything. This downturn really
shows how important it is for a state
driven by commodity markets to have
rainy day funds," Ness concludes.

Tribal Dialogue
As a late-session bill, the budget bill
included several amendments, including
one that prohibits the North Dakota Public
Service Commission from setting rates
on gas royalty valuations, while a second
creates a legislation management committee
to consider tax concerns raised by the
Three Affiliated Tribes, Ness mentions.
Efforts by the tribe to change the tax
agreement it has with the state were unsuccessful, he says.
"They came in too late in the session
to have any real discussion," he reasons.
"The new commission will hold a dialogue
between the tribe and the state prior to
the next session.
"The tribe says it wants to sit only
with the governor," Ness adds. "That is
not the way the process works."
In April, it was reported that members
of the Three Affiliated Tribes attended a
meeting at the White House sponsored
by Senators John Hoeven, R-N.D., and
Steve Daines, R-Mt. The meeting included
members of a dozen tribes and was held
to seek the president's support for Senator
Hoeven's bill to streamline permitting
on tribal lands, and to encourage tribes
to enter joint ventures with operators for
energy development.
Optimism Renews
The 2017 session will be remembered
as one that started with plenty of noise,
but ultimately lacked the drama of the
past decade when angry landowners, rightof-way tussles and crude-by-rail controversies grabbed the spotlight, Ness remarks.
"The downturn also turned down the vol-

32 THE AMERICAN OIL & GAS REPORTER

ume from the opposition," he allows.
"We are seeing increased activity
across the Bakken," Ness reports. "(As
of mid-May), we were back to 50 rigs
running. Most companies are completing

their drilled-but-uncompleted wells, and
production is back at 1.3 million barrels
a day. This summer is shaping up to be
busy, and 2018 should be even busier."
r

Late-Breaking Developments
Don't Alter Course In Colorado
DENVER-In a legislative session that
went from three months of customary
debate about familiar issues to a final
two weeks of heated challenges regarding
the level of acceptable risk associated
with oil and natural gas facilities' proximity to growing suburban communities,
the industry emerged from the session
without taking any hits, assesses Colorado
Oil & Gas Association President and
Chief Executive Officer Dan Haley. With
the Capitol split between a Democraticcontrolled House and a Republican-controlled Senate, no extreme or oppressive
anti-oil and gas bills made their way to
the governor's desk, Haley said.
"We are seeing reaction to the Trump
administration on the local level," Haley
suggested. "There is a sense among some
activists that the federal government is
not going to protect them, so they are
asking for help from their local political
leaders."
Several controversial bills appeared
to be more political than substantive, he
suggested, but the split legislature meant
the "more extreme measures would not
advance from either chamber."
"A few years ago, there were 13 bills
aimed squarely at halting oil and gas development in Colorado," he observed.
"This was a year for us to 'hold the line'
and I think we did that."
After adjournment, COGA hosted a
review of the session on May 12 at the
Denver Athletic Club. The event featured
four legislators who provided perspectives
from inside the Capitol. In a panel discussion, Representative Cole Wist, RArapahoe County, Representative Matt
Gray, D-Broomfield, Senator Kevin Priola,
R-Adams County, and Senator Dominick
Moreno, D-Commerce City, discussed
how an April home explosion in Firestone,
Co., which was attributed to a nearby
well, influenced debate during the session's
final weeks.
"We must recognize that accidents
are not acceptable," Wist intoned. "The
incident management process will determine the underlying cause, so it was inappropriate for some to jump to conclusions."

On the other hand, the oil and gas industry "must recognize it is held to safety
standards that are unbelievably high,"
Gray advised. "Wherever there is oil and
gas near homes or schools, the community
will have a very low tolerance for risk."
In the heated climate following the
Firestone tragedy, Haley noted that some
Democratic legislators, led by Representative Mike Foote, D-Lafayette, proposed
bills that aimed to move oil and gas operations further from schools and force
companies to provide mapping data for
all subsurface infrastructure.

Flowline Mapping
Foote sponsored a notable bill that
would have required operators to provide
a description and mapping data for all
flowlines in the state, Haley said. HB
1372 would have required operators to
provide the location of all flowlines, gathering lines and pipelines to both the Colorado Oil & Gas Conservation Commission and local governments. The bill included a provision that required operators
to fulfill local governments' prospective
requests for five-year development plans
in their areas.
"The debate intensity really turned up
the last few weeks of the session," Haley
described. "We got wind of the mapping
bill less than a week before the end of
the session. It was definitely cause for
concern."
Industry representatives had several
concerns with HB 1372, Haley observed.
"There are proprietary issues over public
access to the data, to say nothing of the
jurisdictional and safety issues if the data
were to fall into the wrong hands," he
said. As an example of the latter, he
pointed to a letter published in a Boulder,
Co., newspaper that appeared to advocate
direct action against oil and gas facilities
and physical harm to industry workers.
Companies were in the process of
complying with a COGCC notice to operators that sought information on flowline
locations when HB 1372 was introduced.
Governor John Hickenlooper ordered the
NTO following the April 17 home explosion that resulted in two deaths and one

American Oil and Gas Reporter - June 2017

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