Energy committee focuses on natural gas, pipeline issues

Legislators look at state energy policies

Jill Schramm/MDN Sen. David Hogue, right, speaks to the Energy Committee of the Minot Area Chamber EDC Thursday at a Minot restaurant. Listening at left is Mark Lyman, economic development director for MACEDC.

Making use of North Dakota’s excess natural gas and resolving pipeline siting issues are significant policy issues facing an interim legislative committee tasked with energy matters.

Sen. David Hogue, R-ND, who chairs the Energy Development and Transmission Committee, identified three major concerns that revolve around natural gas and pipelines in speaking to the Minot Area Chamber EDC’s Energy Committee Thursday.

Excess natural gas has tremendous impact on North Dakota’s future revenues and revenues of industry operators, Hogue said.

“You can’t flare all that gas,” he said. “As the play matures, there’s a disproportionate amount of natural gas that’s being produced in relation to the oil, and if you don’t have a home for that natural gas, you have to decrease production of oil.”

About five years ago, there was a proposal to build a billion-dollar natural gas pipeline from the Bakken to Grand Forks.

“North Dakota was prepared to give a grant of $300 million,” Hogue said. “You just do the math on how our oil production and oil revenue is going to be curtailed in the coming biennium if we don’t have a home for this gas. It’s a pretty easy decision for the state. Of course, that pipeline never got built. The problem was on the eastern side, there just wasn’t a big enough customer to take all that gas.”

That proposal fell by the wayside. However, Hogue said, the committee is looking at shorter pipelines that might provide natural gas to smaller communities in the west, including those on the Fort Berthold Reservation.

Hogue said the committee also is focused on other promising ventures. One is a gas-to-liquids plant near Trenton, proposed by Cerilon.

“We did say we would be willing to help with a grant or low-interest loan if they would convert some of the natural gas to fertilizer, because that’s a perfect synergy for our state’s economy, taking an excess product that we need to get rid of and converting it to a product that we do need,” Hogue said. “They want to make jet fuel because that’s more lucrative than fertilizer. But it’s potentially another phase of their project.”

Another piece of good news is Basin Electric’s recent announcement that it will build a 1,400-megawatt electricity-generating facility fired by natural gas, he said.

“The big thing for us in North Dakota is they would potentially take 7 percent of the natural gas. That’s how big a project this is,” Hogue said. “From a policy perspective, that’s great because it’s mostly all private investment and North Dakota is the beneficiary — again taking some of that excess gas that comes with the oil in the production.”

Basin Electric has said its decision regarding the plant’s location will depend on access to pipelines, he added.

Although pipelines are the most efficient way to move liquids and gas, it is difficult to encourage the private sector to invest when federal regulations change with whoever is in the White House, he said. Even in North Dakota, there are those who raise arguments about dangers and eminent domain in opposing pipelines, he said.

“We can deal with those issues, but to have just widespread opposition to pipeline infrastructure just doesn’t make sense to me from a state, big-picture standpoint,” he said. “We in North Dakota want to make sure that we’re being reasonable in what we impose on those who build pipelines.”

In light of pushback by counties over how pipelines are sited, Hogue said the Legislature might consider clarifying state law to support the position that the Public Service Commission has sole authority to regulate pipeline siting.

Hogue said the interim committee has looked at South Dakota’s policies for pipelines for possible adoption. Those rules include a requirement that companies pay landowners $500 to enter property to investigate suitability for a pipeline and set a limit on unused easements. South Dakota law states easements expire if a project permit isn’t obtained within five years.

The interim committee also is focused on supporting the Energy & Environmental Research Center in Grand Forks in researching enhanced oil recovery, Hogue said. Injecting carbon dioxide to increase oil production is proven technology, but the technique doesn’t work in the Bakken formation, he said. EERC is researching to find a process that works, and companies also are testing on their own.

“We’re all about trying to encourage that research and to encourage those companies,” Hogue said.


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