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AS I SEE IT

Posted 3/21/12 (Wed)

By Neal A. Shipman
Farmer Editor

Come April 1, new rules governing North Dakota’s oilfield will go into effect. And as would be expected, almost immediately, there were those in the oilfield business that said that the new rules, and in particular the increase in bond payments and the limiting of liquid waste pits at oil well sites, are too hefty and send the wrong message to the state’s oil industry.
Granted, no one wants to send the wrong message to the oil industry that is doing robust business in western North Dakota and as a result filling the state’s coffers with record revenues. The last thing that North Dakota wants to do is to kill the goose that is laying the golden eggs in the state.
What the state is enacting are rules and regulations that are designed to protect North Dakota and its citizens.
So what are some of the new rules?
First, the state is requiring that drilling companies disclose what is going down the hole as part of the hydraulic fracking process. Considering that the EPA is studying the fracking process in Wyoming and other states, it makes a lot of sense for North Dakota to be one step ahead of the federal government when it comes to knowing what chemicals are being injected into the ground. Once North Dakota, and its regulatory agencies, know what is being used and are comfortable that these chemicals are not creating any safety or environmental concerns to our groundwater sources, the state will be better able to withstand any challenges issued by the federal government.
Second, the state is raising the bond limit on oil wells. The new rules boost the bond requirements for oil wells and salt water disposal wells from $20,000 to $50,000. Again, while no one wants to see the cost of doing business go up, the increase in the bond requirement would have to be considered a very minor cost when a new well being drilled into the Bakken costs more than $10 million.
The third major rule change would prohibit the use of open pits to dump liquid drilling wastes unless the well is less than 5,000 feet deep. Under the new rules, the waste would have to be stored in tanks or at approved sites. Again, the rule just makes common sense. The waste products that are currently being disposed of in these open pits are a conglomerate of liquids that pose serious environmental concerns if the pits were to rupture or be flooded by heavy runoff like many were last year.
Are the new rules punitive to the state’s oil industry? Hardly.
North Dakota has always been a good partner with the oil industry. And as such, North Dakota will continue to work with oil companies to help foster the continued development of the oil patch in western North Dakota. But North Dakota, and its regulatory agencies, also have a responsibility to assure the citizens of the state, and in particular, to those of us who live in this area that someone is watching out for them and making sure that our water and land is not environmentally damaged more than it already has been.