North Dakota bill requires payment of taxes, royalties on wasted natural gas within 2 weeks

Energy Associated Press

North Dakota's Senate is considering legislation that would drastically cut the time oil companies can burn off and waste natural gas for free.

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Sen. Connie Triplett, D-Grand Forks, is sponsoring the bill that would require companies to begin paying royalties and taxes on wasted natural gas within 14 days after an oil well begins production. Companies are given a year at present.

"This does nothing to stop flaring," Triplett told the Senate Energy and Natural Resources Committee on Friday. Instead, she said it sends a message to companies that "you should pay" to waste natural gas, a byproduct of oil production.

The percentage of flared natural gas in North Dakota has been about one-third of production over the past several years. The amount has decreased to about 25 percent after regulators endorsed a policy in July that sets goals to reduce flaring in incremental steps through 2020. The new rules allow regulators to set production limits on oil companies if the targets are not met.

"This is just one more incentive for them to pick up the pace," Triplett told the committee, which took no immediate action on the measure.

Ron Ness, president of the North Dakota Petroleum Council, said the industry has invested $13 billion to capture the gas and there is still a challenge obtaining permission from some landowners in western North Dakota's oil patch to place gas pipelines on some property.

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"We want to get this gas, no question about it," Ness said in opposition to the bill, calling it a "sin tax."

"We are doing everything we can to work with specific landowners," Ness said.

Wayde Schafer, a North Dakota spokesman for the Sierra Club, said his group's primary focus in the past has been on the environmental impacts of flaring natural gas.

"However, this bill addresses an equally disconcerting impact to North Dakotans from gas flaring," he said. "Mineral owners are seeing a natural resource ... literally going up in smoke, without being financially compensated."

Supporters of the bill said North Dakota residents also are being shortchanged by millions of dollars in lost state tax revenue from the wasted gas.

Eric Thompson of Bismarck told lawmakers "by not passing this bill, you are handicapping city and county governments and yourselves."