American Oil and Gas Reporter - September 2018 - 129

NORTH DAKOTA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FROM PAGE 103
of $15 billion-$18 billion on those projects
and associated infrastructure, and a similarly
sized investment will be necessary to allow
the industry to continue growing.
"That infrastructure expansion is coming on line, and the good news is that
those who are in a position to start adding
additional pipelines are getting the message
that North Dakota is ripe for expansion,"
she reflects. "Companies would have
added even more rigs, but they are constrained by, first of all, workforce limitations. Second are the limits imposed by
the natural gas infrastructure, processing
systems and value-added facilities. Third,
crude oil take-away is fine now and will
be for the next couple of years, but companies need to be planning and begin
building to expand, expand, expand."
Some of those needed investments already are happening, she notes, with
companies investing $160 million a week
in drilling wells and building the needed
support facilities. On a national level,
new pipelines are helping reduce the
basis differential and providing operators
with greater net backs.
"There is less of a discount on Bakken
oil, because operators are able to transport
it out of state, and that means $2-$4 a
barrel more back to the companies, which
they can use for capital investments. Every
additional dollar that they gain is equivalent
to $90 million in tax revenue for the state
of North Dakota," Cutting details.
Revenues
Following approval by the North Dakota Industrial Commission, new rules in-

creasing the transparency and clarity of
oil and gas royalty statements were approved by the legislature's Administrative
Rules Committee. Ness reports the changes
will not take effect until July 2019.
According to media reports, the new
rules require oil producers to identify the
amount and purpose of all deductions
from royalty payments, categorized as
transportation, compression, processing
or administrative costs. The July deadline
allows time for companies to update their
computer systems and for legislators to
revisit the issue during the 2019 session.
NDPC submitted comments arguing operators would have to spend as much as
$500,000 each to upgrade their software
to ensure the royalty statements comply
with the new rules.
How the state distributes the revenues
generated by oil and gas activities also is
under scrutiny, Ness says. North Dakota
collects about $200 million a month, and
allocates 30 percent into a legacy fund that
now holds $5.5 billion. The state constitution
blocks lawmakers from spending any of
the fund's principal or earnings until June
30, 2017. According to media reports, North
Dakota used $200 million in legacy fund
earnings to balance the state's two-year
budget during the 2018 legislative session.
The legacy fund was one of the topics
on the agenda for the Aug. 16 Greater
North Dakota Chamber's annual policy
summer, which brings together business
and government leaders, he describes.
Other issues included the state's transportation infrastructure and addressing
the workforce shortage.

Cutting adds that the state has tried to
prevent oil or gas revenues from providing
the primary funding sources for essential
state services. "It is attempting to not
rely on oil and gas at all times, but
industry still is a significant contributor.
Because of oil and gas revenues, the legislature reduced property taxes, and property taxes were the main funding mechanism for education. Therefore, if lawmakers reduce property taxes because of
oil and gas, then oil and gas became a
bigger contributor to education," she says.
Blu Hulsey, NDPC chairman, points
out a significant amount of North Dakota's
economic activity is associated with the
oil and gas industry.
"If you are in western North Dakota,
whether it is the growth or new highways,
the state has a tremendous amount of
assets within its legacy fund," he says.
"Legislators are pondering what the future
holds. Those officials elected to chart the
course of the state in the next biennium
are considering where they should be
looking from a budget perspective, where
they should be going for a policy perspective, and how the oil and gas funds
impact those plans."
NDPC recently obtained results from
a public perception survey, Ness says,
with the poll showing the industry is
viewed very favorability in the state. "It
is providing jobs, economic activity and
has helped turned around the population
numbers. It is bringing a younger population to the state. That activity is helping
to fill schools instead of them closing.
North Dakota is doing just fine."
r

DEP: Shale Wells Have Limited Impacts
HARRISBURG, PA.-The Pennsylvania Department of Environmental Protection's one-year air monitoring project
examining pollutants released by Marcellus
Shale oil and natural gas well sites finds
no emission of monitored pollutants that
exceeds National Ambient Air Quality
Standards limits.
According to Long-Term Ambient Air
Monitoring Project: Marcellus Shale Gas
Facilities, DEP undertook a one-year
study-beginning in July 2012-of the shale
gas industry's impacts on Pennsylvania's
overall air quality, focusing on Washington
County, Pa. According to the agency, it
selected that county because it was the
first county in the state to begin Marcellus
Shale activities, and because it is home
to permanent gathering and treatment in-

frastructure.
While the study's primary purpose
was to determine the presence or lack of
any chronic or long-term public health
risks from multiple shale gas sources,
DEP specifies three basic goals:
* Examining both toxic/hazardous
air pollutants and criteria pollutants;
* Identifying and assessing potential
increases in ambient concentrations of
criteria pollutants in the project area; and
* Assessing and identifying potential
implications that the observed results
may have in other areas of Pennsylvania.
The study used four air quality monitoring sites in Washington County: Meddings Road, Welsh Road, Jaspen Way
and Henderson Road. A site in
Arendtsville, Adams County, Pa., outside

the natural gas development, was used to
serve as a local background concentration
study site. Meteorological measures were
collected from each site, DEP says.
Findings And Recommendations
Long-Term Ambient Air Monitoring
Project has several key findings, including
that the primary criteria pollutant monitoring site, Meddings Road, did not report
NAAQS-related values for any of the
monitored criteria pollutants-ozone, nitrogen oxides, carbon monoxide, or particulate matter less than 2.5 micrometers
that exceeded the applicable NAAQS or
indicated a probable future exceedance
based on the data pattern. According to
DEP, the pattern of recorded pollutant
concentration measurements did not inSEPTEMBER 2018 129

American Oil and Gas Reporter - September 2018

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