North Dakota loses millions in state revenue from flaring natural gas, study finds

FARGO — North Dakota missed out on $12.6 million in state taxes and federal royalties in 2019 due to natural gas from public lands that wasn’t captured because of waste by flaring or venting, a new study found.

North Dakota lost $908,000 in state revenue from state taxes and $11.7 million in state revenue from federal royalties, according to a report by Synapse Energy Economics for the Environmental Defense Fund.

In 2019 the volume of wasted gas from federal and tribal lands in North Dakota was 61.3 billion cubic feet, behind only New Mexico, where 62.7 billion cubic feet of natural gas was wasted, according to the report. Since 2019, however, New Mexico has adopted regulations to reduce flaring.

North Dakota is among the six states with the highest volume of wasted gas from public lands, which lost a combined $18.8 million in state revenue and $19.6 million in federal royalty revenue, the study found, reporting the losses in 2022 dollars.

Among the six states, North Dakota’s share of revenues lost from wasted gas comprised 4.8% of combined lost revenue from state taxes and 11.3% of combined lost state revenues from federal royalties, according to the report.

The Synapse report found that leaks accounted for 46% and flaring 54% of wasted natural gas. North Dakota captures 95% of natural gas, two-thirds of which comes from oil wells, according to the state's most recent figures.

The total volume of wasted natural gas on federal and tribal lands in the six states, 162.65 billion cubic feet, was worth $509 million — enough gas to meet the yearly needs of 2.2 million households, or almost as many households as New Mexico, North Dakota, Utah and Wyoming combined, the study found.

“Those are real serious numbers,” said Jon Goldstein, senior director of regulatory and legislative affairs at the Environmental Defense Fund. “It’s a problem for royalty owners, and when you’re talking about federal land, those owners are all of us.”

Lost revenues from wasted gas mean less money available for priorities like education and infrastructure and release of pollutants that fuel climate change and endanger public health, Goldstein said.

The economic losses, as well as studies finding health impacts from flaring, were cited in comments submitted by the Environmental Defense Fund and other groups, including North Dakota-based Dakota Resource Council and Fort Berthold POWER, in support of a new rule for reducing methane emissions under consideration by the Bureau of Land Management, which manages federal lands, including oil and gas development.

Natural gas flaring and venting is a major source of emissions of methane, a potent greenhouse gas. New rules to reduce methane emissions are being drafted by the BLM, with a focus on curbing waste, and the Environmental Protection Agency, with the aim of reducing pollution.

North Dakota has been cited as a significant contributor of flared gas. The National Oceanic and Atmospheric Administration, NOAA, calculated values of flared gas volumes based on estimates from satellite images and found discrepancies “on the order of billions of cubic feet between reported and observed volumes” in New Mexico, North Dakota and Texas.

Although flaring, or burning gas, is less harmful for the environment than venting, or releasing gas, even burned gas is a serious environmental problem, as documented by the NOAA study, Goldstein said.

“What that shows us is there’s a huge pollution problem coming from flared gas,” he said.

The International Energy Agency found that, globally, actual emissions were about 70% greater than estimates from national governments.

On federal and tribal lands, roughly 12,000 people — including 1,000 children and 1,600 older Americans — resided within half a mile of a well with flaring, according to data compiled and analyzed by the Environmental Defense Fund.

Another study, from 2018, found that people living on the Fort Berthold Reservation in North Dakota are twice more likely to live within a half-mile of an oil and gas facility compared to the state population, placing them at higher risk of adverse health impacts, according to the Clean Air Task Force.

Flaring intensity is particularly high at Fort Berthold and disproportionately affects members of the Mandan, Hidatsa and Arikara Nation living there, according to comments from the environmental groups.

In 2019, the vast majority of wasted gas in North Dakota — almost 60 billion cubic feet of the 61.3 billion cubic feet total for federal and tribal lands in the state — came from flaring. About 81% of the wasted gas in North Dakota in 2019 came from oil and gas development at Fort Berthold, the Synapse study found.

Delvyn Rabbithead, a member of the Dakota Resource Council who lives in Parshall on the Fort Berthold Reservation, said flaring is especially noticeable at night, when the flames can be seen for miles.

“At night, you can see all the orange,” he said. “It’s something that’s happening around us.”

At Fort Berthold, people jokingly refer to Four Bears, the name of the reservation’s casino as well as a bridge over Lake Sakakawea as “Flare Bears,” he said. Rabbithead supports tighter regulations to reduce flaring.

The Mandan, Hidatsa and Arikara Nation tried unsuccessfully in 2013 to get the authority to regulate flaring in the face of what tribal officials said was federal inaction.

Federal officials have acknowledged that efforts to reduce natural gas waste in North Dakota have failed to impose any gas capture requirements in the state, the environmental groups said.

North Dakota has the highest intensity of flaring, with a rate seven times higher than New Mexico, the second-highest state, according to a study by Rystad Energy for the Environmental Defense Fund, as previously reported by The Forum .

Lynn Helms, director of the North Dakota Department of Mineral Resources, has said the vast majority of natural gas produced in the state is a byproduct of oil wells, making it more difficult to capture.

The state has more work to do to reduce flaring, but captures significantly more gas than before, with more gas gathering and processing infrastructure coming on line, Helms said. The state is targeting four oil fields that lag far below the overall capture rate. Three of the four oil fields are on the Fort Berthold Reservation.

An analysis of satellite data found that almost 20% of all flaring from 2012 to 2020 in North Dakota occurred at Fort Berthold, which has about 2,600 wells, according to the environmental groups’ comments to the BLM.

As reported earlier by The Forum , a recent study found that a 1% increase in flared natural gas in North Dakota increased respiratory-related hospitalization by 0.73%.

The study, published in the Journal of Public Economics, found 11,877 respiratory-related hospital visits from 2007 to 2015 by people living within 60 miles of an active oil well in North Dakota could have been prevented if the state had met its gas capture goal during the nine-year period.