The Bakken formation is one of the largest contiguous deposits of oil and natural gas in the U.S. and, as a result, has become a hotbed of activity in the production of oil and gas. North Dakota is one of 11 key states that the Gas Processors Association (GPA) monitors, and we are keeping a close watch on a notice of proposed rules for the underground gathering pipelines of oil, water and gas recently issued by the North Dakota Industrial Commission (NDIC).
The NDIC was created to facilitate the development of pipeline facilities to support the production, transportation and use of these energy-related resources. Members of the NDIC are the governor, attorney general and the state’s agriculture commissioner. The NDIC Oil and Gas division estimates a total of 36,000 miles of gathering pipelines by 2020 in the state.
During the 2015 legislative session, HB3158 expanded the authority of the commission relating to the operation of underground gathering pipelines. While HB1358 was intended to cover oil and water pipelines, the NDIC also included in this rulemaking additional reporting requirements for underground pipelines designed to transport natural gas and underground gathering pipelines designed or intended to transfer associated or non-associated gas from a production facility to a gas processing facility.
The commission says the purpose of the proposed rules is to improve underground gathering pipeline safety and integrity, but we at the GPA argue that the midstream industry already operates under numerous codes, standards and best management/recommended practices to ensure safe operations. Despite involving volatile substances at high pressures, the midstream industry has a superb safety record, and we can attest to our members’ compliance and diligence when it comes to operating safely, thanks to the annual safety statistics that we collect from our members.
GPA’s safety committee has largely contributed to the midstream industry’s impressive safety record by bringing together safety managers from member committees and pro viding them with ongoing opportunities to share experiences and ideas that can be used by all to upgrade safety practices at their respective facilities.
NDIC’s proposed rules could potentially conflict with another of the state’s regulatory agencies. The North Dakota Public Service Commission currently has jurisdiction over the safety of intrastate pipelines and audits intrastate pipelines for safety in conjunction with federal Pipeline and Hazardous Materials Safety Administration safety rules. This is clearly a duplication of the safety requirements.
GPA is concerned the additional proposed rules for underground gathering pipelines will unnecessarily increase costs and time for the midstream industry by creating duplicative rules and regulations for new construction of gathering pipeline and facilities. While bonding is not required for gas pipelines, the proposed rules have been expanded to include specific requirements for construction and design, reclamation of pipeline rights of way, inspection by third-party independent inspectors, operating pressures, leak detection monitoring, corrosion control, continual pipeline integrity, proper pipeline repair and pipeline abandonment. The NDIC cites that they do not expect these additional requirements to have an impact of more than $50,000 on business.
GPA hasn’t done an analysis at this point, but I can say on behalf of the association and our members that $50,000 sounds like an unreasonably low estimate, especially when taking into account the duplication of efforts.
In April, four public hearings will take place and comments will be taken.
GPA has a number of members with midstream operations in North Dakota that will be significantly impacted by the new, and in some cases duplicative, reporting rules. We are reviewing the proposed rules and stand ready to work with the NDIC to provide feedback as our position is developed.
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