Country
Assessment
NDAC Section 43-02-03-52.1 requires reporting of the amounts of gas associated with oil wells from the first day of production, including flowback and production test gas and flared volumes, using Gas Production Report Form 5B. NDAC Section 43-02-03-44 mandates all measurement equipment and volume determination used for reporting casinghead gas to be compliant with American Gas Association standards. DAQ requires operators to submit an Incinerators or Flares Annual Emission Inventory Report. Oil and gas operators may be responsible for submitting additional environmental reports to both DAQ and the EPA. Operators must use air quality models or formulas included in different chapters of NDAC Article 33.1-15 when reporting air emissions data.
According to North Dakota Century Code Section 38-08-06.4 , violators of flaring exemptions will pay production taxes and royalties on flared gas. NDIC Order 24665, 2014 , outlines penalties the NDIC may impose on operators for failing to comply with gas capture goals. Penalties start at US$1,000 a month, commencing the month following the month in which the operator fails to attain the gas capture goals, oil production exceeds production restrictions, and the operator fails to file for a hearing with the NDIC. Penalties double every month of noncompliance up to a maximum of US$12,500 a month. The same level of penalty applies if an operator fails to comply with production restrictions for three months despite monthly notices of violations from the NDIC. North Dakota Century Code Section 38-08-16 allows for civil penalties that can be imposed on oil and gas operators that violate any rule, regulation, or order from the NDIC. Civil penalties may be up to US$12,500 for each offense. Each day’s violation is a separate offense.
Operators of oil wells that do not report associated gas volumes by the due date (see section 13 of this case study) may be shut in for up to 30 days. If operators continue to produce gas during the shut-in period, they will be subject to penalties. North Dakota Century Code Section 38-08-16 states that a person who willfully violates any rule or order of the commission that pertains to the prevention or control of pollution or waste is guilty of a Class C felony. A court of competent jurisdiction may impose a criminal penalty.
The NDIC regulations are designed to provide operators maximum flexibility to manage their drilling, operation, and gas capture plans within the gas capture goals . The standards are applied state-wide, then at the county level, field level, and well level. The enforcement mechanism provides that if the operator cannot attain the capture goals at the maximum efficiency rate, wells will be restricted to 200 barrels of oil a day if at least 60 percent of the monthly volume of associated gas produced from the well is captured. Otherwise, oil production from such wells should not exceed 100 barrels of oil a day. Because of the unique properties of the geologic formations in Bakken, DAQ has developed guidelines and regulations related to the air quality requirements of facilities producing and processing oil and gas from these formations. More efficient pollution control is required for tanks located on sites where the emissions of volatile organic compounds from tanks are greater than 20 tonnes a year, and such controls must be in place and operational within 60 days of production starting. Companies need to meet certain performance requirements to qualify for a DAQ air permit (see section 10 of this case study). NDAC Section 33.1-15-20, 2019 , focuses on preventing significant deterioration of air quality as a result of emissions from oil and gas well production facilities and refers to many other sections of Chapter 33.1-15 on Air Pollution Control. NDAC Section 33.1-15-20, 2019, provides a formula to calculate emissions, which should meet ambient air quality standards as outlined in NDAC Section 33.1-15-02, 2019. Flares must have automatic ignitors or continuously burning pilots, and the flare stack must be tall enough for adequate dispersion of emissions. NDAC Section 33.1-15-07, 2019 , bans the release of organic compounds in gaseous and vapor forms except in emergencies or when flared or combusted in another effective control device approved by the NDIC. NDAC Section 33.1-15-03, 2019 , restricts the opacity of emissions from flares. According to DAQ, equipment at oil and gas facilities in North Dakota may be subject to Title 40 Code of Federal Regulations (CFR) § 60 and § 63. DAQ has also implemented the national New Source Performance Standards, as outlined in Title 40 CFR 60 Subpart OOOO and Subpart OOOOa. Flares on federal and Indian lands must meet federal performance requirements (as detailed in section 20 of the case study on US federal offshore production).
NDAC Section 43-02-03-60.3, 2014 , states that any operator seeking to have a well certified for purposes of eligibility for the gas tax incentive provided in North Dakota Century Code Section 57-51-02.6 should apply for certification as an oil or gas well employing a system to avoid flaring. Gas is exempt from tax for 2 years and 30 days from the date of first production if either of these conditions is met: The gas is used at the well site to generate electricity, and at least 75 percent of the gas is consumed. The gas is collected at the well site by a system that takes in at least 75 percent of the gas and natural gas liquids volume (more than 50 percent of propane and heavier molecules) for beneficial consumption, such as the production of petrochemicals or fertilizer. The gas tax rate was as high as US$0.18 per thousand cubic feet (mcf) in 2009 and 2010. It was reduced in 2015. In July 2021, it was set at US$0.04 per mcf. In June 2023, the tax rate was set at US$0.1423 per mcf until June 30, 2024.
Per NDIC Order 24665, 2014 , an operator is allowed to accumulate credits for LNG utilization, compressed natural gas (CNG) utilization, and volumes of gas captured during the most recent six months in excess of the current gas capture goal. The NDIC grants the use of credits to meet monthly gas capture target only under certain circumstances: right-of-way issues, midstream outages, federal regulations, safety issues, delayed access to electricity, and possible reservoir damage. Credits cannot be transferred to another operator. Unused credits expire after six months. Most transport contracts are for interruptible service, which means a producer may be denied the ability to transport natural gas in a gathering system if the system is constrained, such as when a shortage of processing capacity causes downstream bottlenecks. In November 2019, the NDIC issued an order to encourage firm (that is, uninterruptible) service agreements, which would guarantee access to pipelines.
Per NDIC Order 24665, 2014 , operators must submit signed affidavits to the NDIC when applying for a drilling permit to prove that they have communicated their gas capture plans with midstream companies. Ideally, this procedure would prevent drilling before sufficient midstream capacity is available. The NDIC envisions separate semi-annual meetings with gas gathering companies and operators that had repeatedly failed to meet gas capture goals. The NDIC considers timely communication among producers, midstream companies, and the NDIC essential to coordinate upstream and midstream development and reduce flaring. (Also see section 24 of the case study on US federal onshore production.)
There is a 10-day limit on flaring during drilling and well testing. Once testing is over, the RRC can authorize further flaring up to 180 days. Operators may release low-pressure-separator hydrocarbons, up to 15 thousand cubic feet (mcf) a day from a gas well or 50 mcf a day, from an oil lease or commingling point for commingled operations (see sections 9 and 10 of this case study).
The RRC regulates the exploration, production, and transport of the oil and gas industry. The TCEQ regulates air emissions.
Statewide Rule 32 allows operators to flare oil-well gas while drilling a new well and testing the well for up to 10 days. Venting is allowed for releases lasting less than 24 hours, unless flaring is necessary for safety reasons; operators are encouraged to verify with RRC District Offices whether they can vent or must flare. Gas that must be unloaded from a well may be vented for up to 24 hours in one continuous event or up to 72 cumulative hours in one month.