American Oil and Gas Reporter - September 2018 - 100

ConventionSection: North Dakota Petroleum Council

Economic, Political Forces
Boost North Dakota
By Dan Holder
BISMARCK, N.D.-North Dakota's
oil and gas producing community is reaping the benefits of technological advances
and an improving infrastructure at a time
when the national leadership is encouraging energy operations and the world is
hungry for more hydrocarbons, assesses
Blu Hulsey, chairman of the North Dakota
Petroleum Council.
As he prepares for the association's
annual convention, to be held Sept. 2426 at the Delta Hotel in Fargo, N.D.,
Hulsey says operators remain excited
about applying the lessons learned during
the 2014-16 economic downturn.
"North Dakota is in a good position,"
says Hulsey, senior vice president of government and regulatory affairs for Continental Resources Inc. in Oklahoma City.
"It really is helpful to have a federal administration that wants to see energy development across the United States. That
helps local officials push what the industry
is doing in North Dakota. NDPC is working on several things with the state to develop consistent regulations."
NDPC President Ron Ness notes North
Dakota remains a commodity state, with
agriculture and energy driving the state's
economy. Lately, oil and gas production
from the Bakken Shale has been setting
output records. Ness says the state's natural
gas production ranking has improved from
16th to 11th in the United States, adding
that since the 2016 elections, the state's
outlook has become more optimistic. On
the economic side, net backs have improved
since the Dakota Access Pipeline began
operations, engineers and accountants
have lowered operating costs for Bakken
wells, and operators have boosted well
productivity more than 22 percent during
the past 30 months, "and these were
world-class wells to begin with," he notes.
"North Dakota certainly is prospering
because natural gas production is just
off the charts," Ness says. "However,
there are tremendous challenges in managing and processing the natural gas and
liquids. We are seeing almost $2 billion
in new natural gas infrastructure an-

nounced since the first of the year, but
that will not be enough. Producers are
choking back production in order to manage pipeline flows and meet the state's
methane emission targets."
Global Power
During the past 15 months, Ness says,
North Dakota has seen a constant parade
of Trump administration officials. He points
out the president visited the state in May,
with Vice President Mike Pence following
in July; Energy Secretary Rick Perry was
there in August, and the heads of the Environmental Protection Agency and Department of Interior also have toured the state.
"The administration has found that
North Dakota is an epicenter in terms of
where reality meets the world in terms of
agricultural production and energy production," Ness applauds. "We have appreciated having them here."
Hulsey indicates that part of North
Dakota's resurgence in energy production
comes from improvements the industry
has seen with regard to the federal permitting
process. "This is one of the things NDPC
has really looked at, and the Trump administration is looking at now," he reports.
North Dakota's oil is among the highest
quality produced anywhere, and is prized
in global markets, Hulsey affirms. While
most U.S. refineries are designed to
handle heavier crudes from countries
such as Venezuela, North Dakota's oil is
especially attractive for less complex refineries more accustomed to accepting
light sweet crudes.
"Considering how North Dakota's oil
and gas production is going, and as the
nation expands its ability to export oil
across the world, we are priming ourselves
for an American energy renaissance, and
becoming more of a player on the world
market," he says.
Moreover, he continues, while the state
is not known as a major natural gas player,
the large amounts of associated gas will
contribute supplies to the liquefied natural
gas facilities that are being built to export
U.S. gas to international customers.
"Energy is going to be one of those
items that really will turn the U.S. trade

100 THE AMERICAN OIL & GAS REPORTER

deficit around," Hulsey predicts. Until
recently, he says, petrodollars flowed
from the United States to Saudi Arabia
and Russia, and those governments were
able to use their energy exports as a
geopolitical weapon.
"Now, the tide has turned, and it is
because of horizontal drilling and the nation's ability to find new assets," Hulsey
says. "President Trump talks about America First. We now have America First energy, and that is both from an oil and natural gas perspective. We have been able
to really expand our horizons. For the
long-term future, the United States will
be a petrodollar receiver."
Domestic energy production is a major
factor in the nation's wealth creation and
rising stock market, he indicates, adding
"This is an exciting time to be in the oil and
gas industry, and an exciting time to see
where we are going as a country. We are
going to work hard to continue to push the
path of energy independence. We will get
there by 2020, and that is a great thing to
talk about from the national perspective."
Regulatory Issues
Operating in North Dakota presents
regulatory challenges, especially concerning the state's gas capture targets.
According to media reports, regulators
are working with NDPC over proposals
to change state policies, including revisions to handling gas capture outside the
core Bakken area, and requiring semiannual reviews of companies' gas capture
results. State officials report the amount
of gas flared by North Dakota producers
dropped to 256 million cubic feet a day
in February, with companies capturing
89 percent of Bakken gas produced
statewide. They note that exceeds the
state target of 85 percent, although the
requirement is scheduled to increase to
88 percent in November.
Hulsey says air regulations remain a
concern for operators. "Officials in the
state are working with industry and NDPC
to improve how we as an industry can
come together and create dialogue with
regulators," he notes.
One reason to hope for an improved

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