North Dakota: $1 Billion Lost in Market Value of Natural Gas

Gas FlareNorth Dakota lost $1 Billion in market value of natural gas due to flaring in 2012.

Republicans can’t SPIN their way out of this failure in leadership.

After eight years of allowing industry to flare natural gas at will the Republican Leadership in North Dakota has decided now it’s time to have flaring goals.

This is another example of failed Republican Party leadership of the Legislature and State Government. The Republicans in the last and previous legislative sessions refused to heed the suggestions of the Democratic-NPL minority legislators. Instead they decided to pander to industry and give tax breaks to drillers. Even Republican Party Chairman, Bob Harms sees it as short sighted. Incentives should have been focused on midstream pipeline companies and processors.

Now six months after the legislative session the Industrial Commission made up of the Governor, Attorney General and Agriculture Commissioner, all republicans, decide something needs to be done. They are acting only after pressure from Democrats and citizens across the state and the eyebrow rising of professionals at the national level. What we get is more political spin.

Here is what Attorney General Stenehjem said recently: “by allowing the amount of flaring, the state has “stretched the public’s tolerance and acceptance too far.” As long as we have a long-term strategy … and get to where we don’t have any (more) flaring than absolutely necessary, I think the public would be supportive”. Now that is what I call “failed leadership”. Where were the republican leaders who had full control of development six years ago? Frankly, they were asleep at the wheel and have cost the citizens of North Dakota hundreds of millions of dollars in lost revenue let alone the tremendous waste of a very precious natural resource.

You can’t put all the blame on industry on this one. It falls at the feet of the republican controlled state government. They caved to the idea that it is alright to waste (flare) the natural gas so that greed could be achieved as quickly as possible by exploiting the Bakken oil at the expense of wasting the natural gas. And Senator Hoeven calls this the model for the nation as he pedals the idea of North Dakota being a leader! The Industrial Commission spin is that we went from 36% to 29% in flared gas between 2011 and 2013, but what they don’t tell you is the absolute volume of natural gas flared went up, during the same time period, 2.5 times from 106,000 mcf per day to 266,000 mcf per day. Now that is real political spin folks.

Now here we are just beginning to talk about goals. No plans, no permit conditions, no specific solutions for gathering and processing, no idea of effective incentives or possible public/private partnerships and not even a peep from state officials about a strategy to get natural gas to every community in North Dakota as we work to deliver it to the rest of nation.

As we move farther out from the “sweet spot” of the Bakken flaring will only become more of a problem and the solutions will be even more difficult. Even investors are concerned. As recently as March of 2012 investors representing $500 billion in assets sent a letter to 21 of the industry’s largest shale oil producers urging them to reduce or eliminate flaring.

Because of a lack of leadership by the Industrial Commission now North Dakota citizens are getting flared. In 2012 North Dakota, lost due to flaring, an estimated $1Billion in market value of natural gas. Because of a failure in effective public policy we are not only incurring environmental costs, but we are incurring outlandish and unwarranted economic hardship to the producers, landowners, mineral owners and the taxpayers of the state.

This is another glaring example of failed leadership at the state and legislative level totally controlled by Republican Party leaders. It is time citizens vote for a more balanced political makeup of the legislature and state government.