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Published July 31 2013

Forum editorial: ND flaring gets pass from state

Most North Dakotans are proud of the oil and natural gas boom in the Bakken play in western counties. But as the often-misread line from Proverbs warns: “Pride goeth before the fall.” The situation with flaring natural gas ought to be a warning that too much pride can smell like hubris.

A report from an organization that helps private sector businesses make environmentally sound investments is critical of North Dakota’s comparatively lax regulations regarding flaring natural gas off oil wells. Ceres, a Boston-based nonprofit, suggested the state’s regulatory regime actually encourages oil companies to tilt toward short-term gain (flaring) rather than consider a longer term view of how to maximize a valuable resource.

In lame attempts to explain away wasteful flaring, state officials crow the percentage of flared gas is down from about 34 percent a few years ago to 29 percent today. True enough. But a percentage measure is deceiving. In reality, much more gas is being released, thus the lower percentage is meaningless when compared to the amount of gas flared. More gas is being wasted at 29 percent flare than was burned off at 34 percent. The state’s goal is to lower the level to 10 percent, but even then the state will flare more natural gas than it did in 2010 because of increased production.

And how’s this statistic for fiscally conservative North Dakotans? At the current rate of flaring, $3.6 million worth of gas is lost every day. In 2012 the value of flared gas was more than $1 billion – fuel that does not go to market and generates nary a nickel of tax revenue.

Well, say industry-friendly regulators and politicians, capacity to transport and process natural gas is inadequate, and the industry is moving as fast as possible to catch up. Therefore, the argument goes, regulatory flexibility is in order. But the state’s regulations and taxes seem to be disincentives for companies to invest in pipelines and processing plants. It can be cheaper to flare it off. “Unusually permissive,” is how the Ceres report describes North Dakota’s flaring standards.

In light of how other oil states regulate flaring, “unusually permissive” is a droll understatement. For example, Texas (not exactly a heavy-handed regulator) has more restrictive rules on natural gas capture, and flaring is minimal.

A few companies are moving toward a zero-flaring goal; others are not. In terms of tax policy and regulation, North Dakota can do better with smart incentives that push all companies in the right direction. That’s not happening now, and the Bakken, which at night looks like a gigantic birthday cake, is becoming the national poster boy for appalling waste.

Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.