North Dakota orders 5 oil companies to reduce production as penalty for excessive gas flaring

Energy Associated Press

Five oil companies must reduce their production at certain wells in North Dakota as a penalty for burning off more natural gas than allowed last month, a spokeswoman for the state's Oil and Gas Division said.

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The state ordered the five companies to curb their production to 100 barrels per day at certain wells starting this month. Alison Ritter, a spokeswoman for the division, said this is the largest number of companies and wells the state has sanctioned since new flaring regulations took effect on Jan. 1, the Bismarck Tribune reported.

The new rules require companies to capture at least 77 percent of natural gas produced during oil production. Under a policy adopted by the State Industrial Commission, the 100-barrel restriction applies to companies that are not capturing at least 60 percent of the gas from the well.

The division ordered production to be restricted at certain wells operated by Emerald Oil, Occidental Petroleum Corporation, QEP, Abraxas Petroleum and Enerplus.

Mitch Ayer, the vice president for finance & investor relations at Emerald Oil, told the Associated Press the company hasn't been meeting the new state regulations at some of its wells this year because they came into effect before their new midstream system that helps capture more natural gas was came online.

"It was basically a timing issue between the two," he said.

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Ayer said the new system that will transport natural gas from McKenzie County to a plant operated by True Oil Co. outside of Watford City came online near the end of March. He said they expect March will be the last month the company wasn't compliant with the new regulations.

Messages left with the four other companies were not returned Thursday afternoon.

Ritter said the restriction orders are effective for a month and will be continued or dropped depending upon a company's following month production reports. She said penalties would kick in only if the companies don't restrict wells as ordered.

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Information from: Bismarck Tribune, http://www.bismarcktribune.com