N.D. state oil and gas director says industry will need more transportation infrastructure
MINOT, N.D.—North Dakota needs more pipelines to keep up with oil and gas production, Lynn Helms told county officials at the Elmer Jesme Conference of Counties in Minot on Monday, Jan. 22.
Helms, who is director of the North Dakota Department of Mineral Resources, said the state could run out of room in its existing crude oil and natural gas pipelines in four to seven years.
"Today every cubic foot of natural gas we produce has to get into one of two pipelines," he said. "After 2022, those pipelines are 100 percent full of North Dakota gas. There is no place to put another cubic foot of gas."
Because it can take four to five years to permit a large pipeline project, he noted, "We need to start permitting the next natural-gas export pipeline today if it's going to be there when the industry needs it."
Competition for limited pipeline space also keeps natural gas prices low, eroding the economics necessary to reduce flaring, he said. State regulations restrict the amount of allowed flaring, which remains high on Fort Berthold Reservation.
Helms said companies capture 90 to 100 percent of natural gas off-reservation, while the capture rate on the reservation is no better than 70 percent and sometimes as low as 25 to 40 percent because of the extensive permitting process through the federal government and tribe for pipelines to transport the gas.
"It just takes forever and the infrastructure just doesn't get built. It's extremely frustrating," Helms said.
The Dakota Access Pipeline was an asset to the industry in exporting crude oil, but by 2025, that pipeline will be full, Helms said.
"Then we start putting crude oil on rail cars again, which none of us want to do. So we are just seven years away from needing a new major oil export pipeline," he said.
The Sandpiper Pipeline that is proposed to carry Bakken crude is being held up in the permitting process in Minnesota.
"We are all about getting infrastructure built," Helms said. "We have to get our neighbors to the east to cooperate with us so we can move that crude oil out or we will be back in the business of running trains of crude oil through Minot."
Helms also would like to see pipeline infrastructure for produced water. More than 200 semi-truck loads of produced water — underground saltwater removed during drilling — are hauled in Mountrail County every day. In McKenzie County, it's 820 truckloads of produced water and 325 truckloads of crude oil a day.
"A lot of that is because we don't have infrastructure," Helms said. He said a two-year-old state program to regulate saltwater pipelines is making transport safer. The governor also is working with pipeline operators on innovative ways to monitor for leaks.
"He wants to get away from the landowner being the first line of defense and being the one who finds the leak," he said.
The state also needs to have a solution when right of way issues arise in siting pipelines, he said.
"The only realistic ways we have around this right-of-way problem is to be able to use county road right of ways. The law doesn't allow for it, so it's going to have to be on a county-by-county basis whether they can acquire that right of way and allow it to be used," Helms said.
Helms added that North Dakota, with more than 14,000 active wells, is not yet near its capacity to produce oil even with current technology.
"We are long ways from the end of the Bakken play. We estimate 55,000 to 65,000 wells total in North Dakota, not all Bakken, by the time this drilling growth is over," Helms said.
Of the 10 new drilling rigs expected this year, most could end up outside the Bakken core counties because higher oil prices are making fringe areas more profitable. Burke, Divide and northern Mountrail and Williams counties as well as Bottineau County could see more action in the next couple of years, Helms said.