Bismarck, N.D. – The Bureau of Land Management’s (BLM) unnecessary and duplicative proposed rules for venting and flaring could reduce production on impacted leases, reduce state tax revenues and cost thousands of private royalty owners millions in lost royalty income, according to the North Dakota Petroleum Council (NDPC).

“The industry supports the goals of capturing greater quantities of associated gas and reducing waste but this one-size-fits-all federal process could come at a huge cost to North Dakotans while providing few – if any – benefits,” said Tessa Sandstrom, communications manager for the NDPC.

Early industry estimates anticipate production could decrease by more than 20 percent from more than 2,780 affected wells. This would cost the state $23.8 million in oil and gas severance taxes and North Dakota mineral owners more than $39.1 million in lost royalty income if the rule were fully implemented.

“The BLM claims that they could collect $23 million in additional royalty revenues for the federal government, but even if that were true, it would be at the expense of more than $62.9 million in tax revenues and royalty income in North Dakota alone,” said Sandstrom.

“North Dakota already has some of the most comprehensive regulations addressing flaring in the nation. Over the past two years, North Dakota has adopted a series of strict gas capture targets. At the same time, the industry has voluntarily made huge strides in natural gas capture by investing more than $13 billion in natural gas infrastructure since 2006. As a result, flaring has declined even as natural gas production increased.

“This progress has been despite federal regulations, which is often responsible for delays preventing industry from building infrastructure needed to capture more gas. BLM’s staff, time and resources are already overtaxed. Implementing rules and regulations that are already covered by state or other federal agencies is unnecessary and will only further burden employees and dilute their ability to perform their duties. BLM and other federal agencies could make a larger, more immediate impact on reducing flaring by instead fixing permitting, infrastructure and pipeline delays.”

About the North Dakota Petroleum Council
Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 500 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

Media Contact:
Tessa Sandstrom, Communications Manager  | ND Petroleum Council
701.223.6380, tsandstrom@ndoil.org

Industry representatives will work to find solutions to infrastructure needs

Bismarck, N.D. – The North Dakota Petroleum Council (NDPC) members have formed a task force to spearhead the industry’s efforts to significantly reduce natural gas flaring in the state’s Bakken oilfields.

“We recognize that natural gas is an efficient, clean and valuable resource, and that’s why the industry has invested more than $6 billion in new pipelines, processing plants and other infrastructure to move it from the wellhead to the marketplace,” said Terry Kovacevich, NDPC chairman and regional vice president for Marathon Oil. “This is a significant investment, but we are committed to making North Dakota the model of a modern, efficient and technology-driven oilfield.”

Since 2007, when the Bakken was confirmed to be a prolific and world-class resource, gas plant capacity has increased by 340 percent from 227 million cubic feet per day to more than 1 billion cubic feet per day. Despite this significant growth, production continues to outpace capacity due partly to challenges in building appropriate infrastructure and partly because it was not until recently that experts began to fully comprehend the volume and composition of natural gas trapped in the Bakken.

“We have to remember that the Bakken is still a very young play, and this is just one factor in why production has outpaced our ability to build the infrastructure needed. Furthermore, the Bakken is unlike any other play in the world and requires solutions specifically tailored to its geology, climate, landscape and resources,” said Kovacevich.

Members of the task force will pool the knowledge and experience of companies operating in the Bakken and identify solutions to better optimize the resource at the wellhead and increase and improve existing infrastructure to transport gas for processing elsewhere. The group will also focus on educating the public and working collaboratively across stakeholder groups, including government agencies, the Three Affiliated Tribes, researchers, landowners and key industry players.

The Flaring Task Force will address the North Dakota Industry Commission (NDIC) at 1:15 p.m. on Oct. 22, 2013, and will present a report to the NDIC later this year with recommendations for a collaborative effort to reduce flaring.

“This is a very complex issue without any single simple solution,” said John Paganis, commercial director for Murex Petroleum and co-chair for the Task Force. “Our task force will offer balanced, effective solutions for policy makers and regulators to ensure we keep oil development on pace while making the investments in infrastructure and new technologies to capture more of our 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 Kovacevich. “North Dakotans have a long history of sitting down and working together to find solutions that will meet the needs of all. We are confident that with time, all of the key stakeholders can work together to reach our goals of reducing flaring.”

Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 500 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

Contact:  Tessa Sandstrom, Communications Manager, North Dakota Petroleum Council
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The recent “discovery” of the giant Bakken oil field, described as the “largest continuous oil accumulation ever assessed by the US Geological Survey,” bodes fundamental changes for western North Dakota and eastern Montana. Lots of people are coming! Western North Dakota now faces a daunting challenge: building infrastructure that supports a new way of life and culture.

Just ask Don Nickell, president and COO of Nakota Development, LLC. The morning Nakota opened their two Value Place extended-stay hotels in Williston in September 2012, “we had people sitting in their cars in the parking lot, waiting for us to open the doors,” said Nickell.

Since then, Williston Value Place hotels have achieved enviable occupancy rates (>95 percent in August). They have also exceeded their competitors’ occupancy % for the past four months, which is a significant achievement given they have 248 rooms versus their competitor’s properties which average only 90-100 rooms.

Nickell is confident more customers are waiting. He’s in good company. Lynn Helms, director of North Dakota’s Department of Mineral Resources, told an audience at the 2012 North Dakota Association of Oil and Gas Producing Counties that western North Dakota can expect about 250,000 additional people settling west of Highway 83 to help produce oil and natural gas.

It’s more than just about oil and gas, however.  Housing and lodging are of particular concern. Mike Anderson, director of the North Dakota Housing Finance Agency expects population growth to continue in the state for at least the next 15 to 20 years.

While many thousands of men are today living in temporary man camps, a gaping supply hole remains for those seeking lodging for the many two-to-four-month assignments typical in the Bakken and other shale oil regions.  There are thousands of geologists, landsmen, technicians, engineers, field and construction workers and service personnel in need of housing and lodging.

Nakota Development is already two steps ahead in the game; they acquired the Value Place franchise territory rights for North Dakota, Montana, and Wyoming.  They promptly built two hotels in Williston and recently completed a third in July in Dickinson.  Nakota has also purchased, or acquired options on additional land for future construction. Their construction of another Value Place recently began in Watford City and is expected to open in spring of 2014.

The master plan, according to Nakota CEO Art Cahoon, is to invest an estimated $200 million over the next five years in the development of twenty new extended stay hotels in the Bakken and other developing US shale oil regions. Nakota’s willingness to take the early equity risks and invest millions of their own money to build their first two hotels and complete them on schedule brought Nakota a rare commodity in the Bakken: CREDIBILITY.

Even today, with credit availability increasing, Nakota continues to invest significant equity in each of its hotels.  Despite the Bakken’s significant construction and operating challenges, including the scarcity of materials and high labor costs, Nakota has established itself as the gold standard developer and operator in the Bakken. “Current investors, which include all of Nakota’s senior management team, are enjoying very attractive returns on their investment,” said Cahoon.

Click to see Value Place in the Oct/Nov Issue of the Bakken Oil Business Journal.

Value Place is the largest economy extended stay franchise in America. The Value Place Brand comes from the management team that created and developed lodging brands such as Residence Inn (now owned by Marriott), Summerfield Suites (Hyatt) and Candlewood Suites (Intercontinental). In 2011, Value Place was recognized again as a Top 50 Franchise by the Franchise Business Review’s 2011 Franchisee Satisfaction Awards.  Value Place was also recognized in USA Today in 2010 as a recession-proof business.