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Patrick Springer, Published December 17 2008

Project would ease wasteful gas flaring

North Dakota oil and gas fields are forced to burn off natural gas worth $80,000 a day because they lack pipelines to carry the heating fuel to markets, petroleum representatives said Tuesday.

Lynn Helms, the North Dakota Industrial Commission’s mineral resources director, said systems to collect natural gas should get regulatory review that is faster than the procedures required for transportation pipelines.

The difference in review could mean approval for the collector systems that would be several months faster, thus alleviating the wasteful “flaring” of more than 21 million cubic feet of natural gas each day in Mountrail County.

The Industrial Commission has sent a letter to the Public Service Commission urging prompt consideration of the proposed $45 million Prairie Rose natural gas pipeline in northwestern North Dakota.

“Flaring right now in North Dakota is near an all-time high,” Helms said.

The completed Prairie Rose pipeline would carry natural gas to customers in Chicago. Officials hope construction could be completed by the end of next summer.

“By this time next year we’re hoping that 21 million cubic feet of gas is in Chicago,” Helms said. “That’s where it needs to be.”

The project would extend a gas gathering facility near Palermo with a 75-mile pipeline connecting to the Alliance Pipeline near Towner, N.D.

Public service commissioners must decide whether the Prairie Pipeline is a gathering system, used to collect natural gas from the field, or a transmission pipeline, which requires a more rigorous review, including formal or informal public hearing.

“That flaring of gas has always been a sore point with me,” said Kevin Cramer, public service commissioner, noting it is lost revenue and a squandered natural resource.

Still, staff believes the Prairie Rose project qualifies as a pipeline, and therefore should get more regulatory scrutiny. Regulators must weigh the impact on the environment, cultural resources and people, Cramer said.

The issue likely will come up for discussion in today’s Public Service Commission meeting, he added.

Meanwhile, the steep drop in oil prices is being felt in North Dakota’s oil patch, where the price recently has fallen to around $30 a barrel – down from a record $136 in July.

Current prices are below the $50 to $75 a barrel the industry considers viable, said Ron Ness, president of the North Dakota Petroleum Council.

Ness and Helms have estimated North Dakota’s oil production will drop by up to a third because of the lower prices. Oil companies each are reducing their rig counts by one or two, Helms said.

Still, because of leases with “use it or lose it provisions,” the reductions should not be the sharp decline that struck during the oil bust of the 1980s, Helms said.

One benefit of the price slump, Ness said, is that costs – including those involving land, wages and drilling – will drop to levels that would mean $80 a barrel oil isn’t needed to make a profit.

Readers can reach Forum reporter

Patrick Springer at (701) 241-5522