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Amy Dalrymple, Forum News Service, Published October 16 2013

Lawsuits filed against oil companies for flaring natural gas in ND

WILLISTON, N.D. – North Dakota mineral owners filed lawsuits Wednesday against 10 oil and gas companies seeking damages for natural gas that was flared.

Bismarck attorney Derrick Braaten said the plaintiffs are owed millions in lost royalties for the flared natural gas, and the case will likely grow to include more companies.

“We’re looking at potentially statewide, all operators,” Braaten said.

Attorneys from five law firms in North Dakota, Colorado, Texas, Montana and Wyoming are involved with the cases and have established a website, www.ndgasflaringlitigation.com.

A news release issued Wednesday by Braaten’s firm, Baumstark Braaten Law Partners, stated the lawsuits aim to create a “compelling economic incentive for producers to reduce and eliminate the wasteful practice of flaring.”

North Dakota flared about 29 percent of the natural gas produced in the state in August, down from the historical high of 36 percent set in September 2011. However, the volume of natural gas flared has increased, and was 9.4 billion cubic feet in August.

Attorneys are seeking class-action certification for the cases that were filed Wednesday in state district court in Divide, Williams, Mountrail and McKenzie counties, all in the heart of the Bakken.

The cases don’t seek a specific amount in damages, but ask for an amount to be determined at trial. Braaten said the damages being sought are for future natural gas flaring of the wells identified and flaring that has occurred in the past six years, or the amount allowed by the statute of limitations.

“You’re talking millions of dollars,” Braaten said. “Just how big that number is, I don’t know right now.”

The companies named are Burlington Resources Oil and Gas, Continental Resources, Crescent Point Energy, HRC Operating, Marathon Oil, Samson Resources, SM Energy, Statoil, WPX Energy and XTO Energy.

The plaintiffs are Gary and Martha Sorenson of Keene; Raymond Brooks Kummer and Carol Kummer of Watford City; Scott Wisdahl of Williston; Miller Family Partnership; Sarah Vogel of Bismarck; Border Farm Trust; and Sheri Johnson Singer of Billings, Mont. Vogel is a former partner in the law firm and former North Dakota agriculture commissioner.

The North Dakota Industrial Commission allows producers to seek exemptions for natural gas flaring according to certain rules while they get oil wells connected to gas-gathering lines. The lawsuits allege that companies are violating the limits and deadlines set by the industrial commission, and mineral owners should be paid royalties.

“We’ve found many instances where operators are just shooting right past what’s allowed,” Braaten said.

More mineral owners are anticipated to make claims. The cases currently involve individual mineral owners, but Braaten said the state could make a similar claim against the companies.

“As far as we can tell, they may owe the state some taxes as well,” Braaten said.

Also Wednesday afternoon, the North Dakota Petroleum Council issued a news release about a task force the industry has formed to reduce natural gas flaring. Spokeswoman Tessa Sandstrom said the timing was a coincidence and subcommittee members have met 11 times to discuss solutions.

North Dakota Petroleum Council President Ron Ness, who hadn’t seen the lawsuits Wednesday, said producers need to go before the industrial commission to get authorization to flare natural gas. Companies are aggressively working on solutions to reduce natural gas flaring, Ness said.

In the industry’s news release, a representative from Marathon Oil, one of the companies targeted by the lawsuits, notes that the industry has invested more than $6 billion in new pipelines, processing plants and infrastructure to capture natural gas.

“The member companies of the NDPC want to responsibly develop the natural resources in North Dakota and America. We also want to optimize the development of our oil and natural gas resources in North Dakota, but this will take significant investments of time and money and will require collaborative efforts between the industry, landowners, government agencies and a number of other key stakeholders,” said Terry Kovacevich, the industry group’s chairman and regional vice president for Marathon.

The group is scheduled to give an update to the North Dakota Industrial Commission next week. Commissioners have said they want to aggressively address flaring and have set goals to reduce the volume of gas that is flared, the number of wells flaring and how long the gas is flared at a well.