NDPC Members Outlined Concerns of BLM Waste Prevention Rule with White House Office of Management and Budget

Posted 10/26/16 (Wed)

Washington, D.C. – Kari Cutting, vice president of the North Dakota Petroleum Council (NDPC) and members of the NDPC Flaring Task Force and Regulatory Committee met with the White House Office of Management and Budget (OMB) last week to discuss concerns regarding the BLM Waste Prevention Rule. Among the major issues with the rule are its redundancy to other federal and state regulations, its reliance on inefficient and uneconomic remote capture technologies and inaccurate and flawed analysis of the rule’s costs and impacts to the economy.

This rule is just one of many that the Obama Administration is pushing hard to finalize before the end of the year despite its duplicity and the serious risk it poses to the state, tribal and national economy. The OMB’s stated mission to consider alternatives to the rulemaking and analyze the rule’s effects on society including a cost-benefit analysis, the NDPC believes that the OMB should consider these and other impacts that would result from this flawed rule.


Rule overreaches state and federal regulations

Among the chief concerns of the rule is that it is duplicative and attempts to regulate areas already overseen by the U.S. Environmental Protection Agency’s (EPA) Clean Air Act and the North Dakota Industrial Commission (NDIC). The NDIC in working with the industry has already implemented a very successful gas capture program that has seen flaring in the Bakken decrease by nearly 50 percent since January 2014 even as natural gas production has increased by 65 percent.

The North Dakota oil and gas industry has spent more than $13 billion to build the infrastructure necessary to capture all natural gas and natural gas liquids to get these valuable commodities to market. This has also allowed the industry to be well ahead of state-prescribed gas capture goals.

The NDPC team asserts that the involvement of yet another federal agency will only slow down the construction of infrastructure needed to capture more natural gas.

The NDPC team believes the federal government should be focused on approving permits for pipeline infrastructure which is vital to capturing more natural gas. Much of the gas flared from federal leases is the result of being stranded due to lack of pipeline connections. The federal agencies themselves are a primary contributor to this flared gas because of their lengthy approval process for pipeline infrastructure.

This rule does not decrease flaring, it is punitive in nature while requiring duplicative paperwork, and creates an additional regulatory and jurisdictional burden on industry and regulatory field staff.


BLM dependent on immature and inefficient technologies

The BLM rule relies heavily on requiring use of remote capture technologies, which have many issues including poor economics, lack of economies of scale and lack of mobility. The Flaring Task Force has already invested considerable time and resources into analyzing, studying and testing many of these technologies, including electrical generation, CNG and LNG transportation fuels, chemical conversion technologies and NGL recovery. Chad Wocken with the University of North Dakota Energy and Environmental Research Center (EERC) has studied the economics of this technology and presented his findings to the OMB.

The EERC has maintained a clearinghouse of remote capture technologies since 2013. EERC has visited with hundreds of companies engaged in these technologies about their application and economics and have added sixty-eight technologies to a readily accessible database, but few would effectively reduce flaring and even fewer are economically feasible at this time.


BLM underestimated cost-benefit analyses

New rules require a Regulatory Impact Assessment (RIA) to determine the impact they would have on state and local economies. In its own assessment, NDPC found that the BLM severely underestimates costs of equipment that would be needed to comply with the rule while grossly overestimating commodity prices. In addition, NDPC provided data to OMB outlining inherent inaccuracies in metering of flared gas as well as extra costs associated with metering equipment.  These costs were three to four times higher than BLM estimates listed in the RIA.

OMB has a maximum of 90 days to complete the review. The meeting was held last Wednesday, October 19 in Washington D.C. and included Eric Dillé, chairman of the NDPC Board of Directors and the Flaring Task Force; Jeff Hume, Shelly Shelby, Roger Kelley and Blu Hulsey with Continental Resources; Vicky Sund and Lesley Schaaff with Hess Corporation; David Greaves, XTO Energy, Susan Carter, ExxonMobil and Chad Wocken with UND EERC.