American Oil and Gas Reporter - August 2019 - 144

ConventionSection: North Dakota Petroleum Council
A state website says Fort Berthold
covers 980,000 acres, with 423,000 acres
comprising tribal trust lands or lands
owned by tribal members and the remainder held as private fee lands, federally
owned lands or homestead lands. According to media reports, the Fort Berthold
Indian Reservation has more than 2,000
wells, many targeting the Bakken Shale.
"Governor Burgum has a very good
relationship with tribal nations, and I
think our relationship with the tribes is
very good right now," Ness describes.
"You are beginning to see a lot of positives in the community and benefits to
tribal members as a result of the oil and
gas activity. I think things are going
very well there."
Government Ethics
Constitutional Measure 1, which state
voters approved in last November's election, is likely to have a negative impact
on oil and gas operations in North Dakota,
Ness predicts.
State documents say Measure 1 will
create a new article to the North Dakota
Constitution pertaining to government

ethics requirements and will allow any
taxpayer to file a lawsuit to enforce the
new article's disclosure requirements. Its
provisions also state:
· Any person spending more than
$200, adjusted for inflation, to influence
a state election must disclose the source
of the funds.
· Lobbyists are prohibited from offering or providing gifts to public officials,
defined as any elected or appointed official
in the executive or legislative branches
and all employees of the legislative branch.
· Public officials cannot accept gifts
from lobbyists.
· Lobbyists are barred from delivering
campaign contributions made by others.
· Public officials cannot engage in
lobbying activities while in office and
for two years after leaving office.
The measure also creates an ethics
commission of five members. The board
will have authority to adopt rules governing
transparency, corruption, elections and
lobbying, and investigate any related allegations.
That new commission may be in place
before the 2020 elections, but Ness says

he sees a tremendous challenge in terms
of getting it running. One early hurdle
will be establishing the ethics panel as a
stand-alone entity, with the measure limiting it to five commissioners and one
and a half staff persons.
"We still are waiting for the commission to be appointed," Ness said in July.
"The legislature tried to establish some
parameters, but there is a tremendous
amount of uncertainty in terms of what
the rules are for political engagement
and contributions to candidates, as well
as legislators or officials attending or participating in (what may be deemed) educational events, and how will those play
out. Most people are just waiting to see
what happens."
Nullifying Measure 1 would require another state referendum to repeal and replace
it, or a judicial decision, he adds. "Essentially,
Measure 1 limits peoples' ability to have a
voice and engage, and potentially support
candidates who support business. It does
not prohibit those entities that do not have
permits from participating in the process,
so it seems to be ripe for that sort of a challenge," Ness assesses.
r

N.D. 'Smart' Regulations Help Industry
BISMARCK, N.D.-State oil and natural gas regulators often are accused of
being too cozy with the industry, but Ron
Ness, president of the North Dakota Petroleum Council, says that is far from the
truth in his state.
"In reality, we have the toughest and
most stringent regulations of anyplace
with active oil and gas development, but
they are smart regulations," he assesses.
"They are the product of a well-thoughtout process that allows you to do your
job and understand where you are going.
We have good regulations on the state
level and a good relationship with those
regulators."
Ness recalls talking with one association member who has been working close
to the Canadian border. He says the operator praised the amount and availability
of information North Dakota regulators
had to work with. "It probably is second
to none anywhere in the country, and
maybe in the world, in terms of being
able to understand what previous operators
and competitors are doing and have done.
The openness of the process and the
types of regulations we have really are

pretty amazing," Ness applauds.
As of July 1, North Dakota's operators
were dealing with a new state agency,
the Department of Environmental Quality,
created under legislation signed in 2017
by Governor Doug Burgum. According
to the bill, DEQ will work to obtain the
approvals and amend the agreements
needed to ensure the state maintains
strong primacy over all federal and state
regulations regarding clean air, water and
land.
Ness says one of DEQ's first priorities
will be to secure primacy from the U.S.
Environmental Protection Agency for
New Source Performance Standards for
methane and volatile organic compound
emissions from oil and gas operations
and working with federal agencies on
rights of way related to gas capture and
other permits.
On the federal regulatory level, the
picture is lot more muddled, Ness adds,
where companies must deal with local
agencies seeking to balance their management authority with what Washington-based officials are willing to relinquish.
Those major federal regulatory hurdles

144 THE AMERICAN OIL & GAS REPORTER

include the Bureau of Land Management
and its venting and flaring regulations,
as well as royalties on flared gas along
with some of BLM's permitting processes;
the listing of North Dakota plants and
animals under the Endangered Species
Act; and the Bureau of Indian Affairs regarding tribal lands and governments, he
lists.
Flaring
The biggest issue on the state regulatory
front continues to be North Dakota's
limits on flaring natural gas, Ness says.
Because of pipeline and other midstream
shortages, producers must burn associated
gas. State figures show nearly 20% of
the state's gas output is diverted to flaring
units, well above North Dakota's 12%
target. State rules call for reducing flaring
to less than 9% by 2020, Ness observes.
"We have a lot of new pipeline capacity
coming on, but these Bakken wells continue to outpace productivity expectations,"
he says. "We have seen a 60% increase
in natural gas production over the past
two years, well over well. We have a lot
of investment coming, but the state needs

American Oil and Gas Reporter - August 2019

Table of Contents for the Digital Edition of American Oil and Gas Reporter - August 2019