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Complex energy bill advances, but with natural gas storage removed

Listening to a conference committee discuss legislation related to pore space are, front row from left, Brady Pelton and Ron Ness of the North Dakota Petroleum Council, and Troy Coons of the Northwest Landowners Association. Listening in back, from left, are Sen. Dale Patten, R-Watford City, Rep. Denton Zubke, R-Watford City, Reice Haase, policy adviser for Gov. Doug Burgum, and Mike Humann of the Department of Trust Lands. Tom Stromme / Bismarck Tribune

BISMARCK -- A joint House-Senate conference committee made changes to a controversial energy bill on Friday, April 12, removing language related to the temporary storage of natural gas.

The conference committee met three times this week to find a compromise on Senate Bill 2344, a complex bill that aims to clear up issues involving pore space, or the cavity or void in underground rock formations.

Some landowner groups have strongly opposed the bill, arguing it would have unintended consequences that take away private property rights. Ownership of pore space belongs to the surface owner, not the mineral owner.

Sen. Jessica Unruh, R-Beulah, the primary sponsor of the bill, proposed to remove all references in the bill to temporary storage of natural gas.

The North Dakota Industrial Commission is studying the feasibility of injecting produced natural gas deep underground as an alternative to flaring. The Energy and Environmental Research Center at the University of North Dakota recently completed a study showing temporary natural gas storage is feasible, but no field work has been conducted.

The bill as initially proposed would have prevented landowners from being compensated for the temporary storage of natural gas in their pore space.

Unruh said because there are a lot of unknowns about how the temporary storage of natural gas will work, she proposed that legislators wait until pilot studies are completed before setting policy on landowner compensation.

“It’s a technology that we don’t quite have nailed down yet,” Unruh said. “And while I think the intention of reducing flaring by temporarily storing natural gas underground is a very, very good thing for us to work toward, before we address the policy in this manner, I think it’s best for us to figure out how that technology works.”

The conference committee voted 6-0 to approve the amendments to the bill. The amended bill will still need approval from both the House and Senate.

With the natural gas storage portion removed, the remaining bill has implications for saltwater disposal wells and using carbon dioxide for enhanced oil recovery.

Landowners with saltwater disposal wells within a unitized field would no longer get compensated for the injection of oilfield wastewater under the bill, unless they had an existing contract. The bill also prevents landowners from making claims that oilfield wastewater injected into a disposal well on adjacent land is migrating into their pore space.

The Northwest Landowners Association continues to oppose the bill, raising concerns that it removes legal rights from landowners.

“Even with amendments, we cannot support this bill without choosing winners and losers, and we cannot support this bill without supporting the taking of at least some private property rights,” Chairman Troy Coons wrote in a letter to legislators.

The North Dakota Farmers Union opposed the bill, but was still evaluating the latest amendments, said lobbyist Kayla Pulvermacher.

“In the end, the issues surrounding pore space will end up getting decided in the courts, which is exactly what industry said they were trying to prevent,” Pulvermacher said.

Meanwhile, a handful of farmers and ranchers from McKenzie County wrote a letter to legislators voicing support for the compromise, saying recent amendments improved the bill.

The North Dakota Petroleum Council has said the legislation provides certainty for projects that will use carbon dioxide to enhance oil recovery. President Ron Ness said the industry group met several times in recent weeks with landowners and western North Dakota legislators to reach a compromise.

Also Friday, the Senate approved the budget for the North Dakota Industrial Commission, or House Bill 1014, which includes $8 million in matching funds to support two pilot projects to test the temporary storage of natural gas. The funding level still needs approval from the House.

Director of Mineral Resources Lynn Helms said there are two oil and gas companies that have strong interest in partnering with the EERC to conduct demonstration projects to test the temporary storage of produced natural gas.

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