North Dakota won one bid for primacy on a federal oil and gas issue, but lost it on another in back-to-back days.
The state will now be able to oversee Class VI injection wells upon completion of innovative carbon sequestration projects — authority it had been seeking for years — but the Bureau of Land Management’s flaring rule will stand, after a measure that would have repealed the regulation failed by one vote in the Senate.
Defections by Senate Republicans Susan Collins of Maine, Lindsey Graham of South Carolina and John McCain of Arizona, as well as crucial “no” votes by Democrats in oil-producing states, including Sen. Heidi Heitkamp, D-N.D., helped kill the effort to revoke a Bureau of Land Management regulation prohibiting flaring that was issued in the waning days of the Obama administration.
Heitkamp did not back down in the face of strident criticism of her vote from fellow legislators in the North Dakota delegation and the oil and gas sector — even as she praised the EPA’s waiver, which she said is crucial to a vital future for fossil fuels like coal.
“I think the first thing is, when you are given a wonderful resource like oil and gas, you shouldn’t waste it,” Heitkamp said. “North Dakotans are pretty conservative people, and they don’t believe in wasting.”
Heitkamp said she discussed the rule with Secretary Ryan Zinke before deciding how she would vote.
“He called me and said I agree with 80 percent of it, and I am willing to work with you to promulgate a new rule,” Heitkamp said.
However, a new rule might have been impossible, Heitkamp said. The Congressional Review Act contains a provision that would have prevented promulgating a similar rule, and she could get no guarantee that a new rule would be forthcoming.
“Some things definitely need to be changed,” she said, adding that she’s already sent a letter to Zinke outlining some ideas about that. President Donald Trump, meanwhile, had already signed an order directing Zinke to review the rule and revise or rescind it to the point permitted by law.
“There is a tremendous exception power in the regulation as written,” Heitkamp said. “Secretary Zinke has the ability to waive the regulation. You could have argued that broad authority wasn’t going to be exercised in the last administration, but it certainly will be in this one. So people who say this will shut in wells, that is incorrect. I think there is exceptional authority that the Secretary has to make this work.”
Another big factor that played into Heitkamp’s no vote was a resolution issued by Mandan, Hidatsa, Arikara tribal Chairman Mark Fox, asking her to support the BLM regulation. A majority of those owning the minerals and living closest to the issue are members of the MHA nation, Heitkamp said, which, to her, also made the issue about retaining local control.
The BLM flaring rule gives the tribe the ability to opt out and work on their own regulations, she said.
Those disapproving the measure, however, said it would hurt the energy sector and kill jobs, and lambasted Heitkamp’s vote.
“Let’s be clear, a vote against this rule is a vote against the workers and families in Western North Dakota,” Rep. Kevin Cramer, R-N.D., said. “To say I’m extremely disappointed in the Senate’s voting down of this CRA today – which would have revoked Obama’s job-killing BLM Methane Rule – is an understatement. It’s a huge missed opportunity to protect our energy jobs in Western North Dakota and across America, and any senator who voted against this rule should be ashamed of themselves. I thank Senator Hoeven for his unwavering support for the BLM Methane CRA, and I hope we see stronger support from our senators for America’s energy industry in the future.”
Senator John Hoeven, R-N.D., meanwhile said the rule simply duplicates things that are already being adequately regulated by North Dakota.
Measures implemented by the state have already reduced flaring by 54 percent over a three-year period, according to the North Dakota Petroleum Council.
“We have shown time and again that a states-led approach to regulation can build a strong economy while also ensuring good environmental stewardship,” Hoeven said. “Under our state’s venting and flaring requirements, we have successfully reduced flaring from over 35 percent to around 10 percent.”
The state’s last report, issued by the Department of Mineral Resources Oil and Gas Division puts the most recent flaring percentage at 11.
Gov. Doug Burgum pointed out North Dakota, Wyoming and Montana have filed legal challenges to the rule and expressed support for any actions Zinke could take to mitigate or rescind the rule.
“I’m extremely disappointed that the Senate failed to revoke the intrusive, one-size-fits-all BLM flaring rule,” Burgum said. “This duplicative rule intrudes on our state’s authority to regulate oil and gas waste on state and privately owned lands, creating confusion over jurisdictional boundaries while not fully acknowledging the tremendous progress North Dakota and the industry have made to reduce flaring. Allowing the BLM rule to remain in place will have detrimental impacts on a significant portion of oil and gas operations on public lands and on North Dakota’s economy as a whole.”
NDPC President Ron Ness said Heitkamp’s vote was an affront to North Dakota and state primacy.
“Hundreds of energy employees and numerous businesses, chambers of commerce and trade associations wrote to express concern for the rule,” Ness said. “Despite this, Senator Heitkamp has chosen to stand with the environmental activists and the Democratic party in Washington, rather than the oil and gas workers and people of North Dakota.”
Ness sad the rule provides no environmental benefits, and will increase costs for state and federal governments, as well as the oil and gas sector.
“Just yesterday, Senator Heitkamp applauded the U.S. Environmental Protection Agency’s decision to grant the state primacy and regulatory authority over CO2 injection wells and the certainty it would bring for North Dakota energy,” Ness said. “Her decision today is a complete reversal of that stance.”
A way out for coal
One EPA rule in particular has been holding up innovative carbon sequestration projects in the state that aim to make long-term storage of carbon dioxide economically feasible, and North Dakota’s Congressional delegation has long been pressing the federal agency to approve a waiver that would give North Dakota the authority to monitor its Class VI wells once carbon sequestration projects reach completion — including Heitkamp.
“North Dakota can lead the country in developing technology to help reduce carbon emissions while also building a viable path forward for traditional sources of energy—and that’s long been my goal,” she said after the waiver was approved Tuesday. “At our meeting last week, Administrator Pruitt signaled that EPA was likely to listen to my calls to quickly approve North Dakota’s application for regulatory primacy over these underground storage wells. This approval provides much-needed certainty for folks in North Dakota who are working to make carbon capture and storage commercially viable — driving down costs for utilities, and helping reduce emissions to address climate change.”
Approval of the application is a critical factor in a project proposed by Red Trail Energy, who is working with the Energy and Environmental Research Center at the University of North Dakota to reduce the carbon footprint at its ethanol plant.
Hoeven said that regulatory uncertainty had been holding their project up, making it impossible to even get a start.
“We’ve worked since 2008 to develop a states-first approach to regulating geological sequestration, which will help our energy industry, both traditional and renewable, to develop new technologies for storing CO2,” Hoeven said. “This is important as we work to develop clean coal technologies, as well as projects to sequester CO2 from ethanol production.”
In a press release, Red Trail’s CEO Gerald Bachmeier called it a first step forward for the company’s project, which will integrate carbon capture and sequestration at the ethanol facility.
John Harju, vice president for Strategic Partnerships at the University of North Dakota’s Energy and Environmental Research Center, was equally excited by the approval, and said the North Dakota Industrial Commission is the right entity to oversee things.
“The NDIC’s proven ability to concurrently consider the environmental and economic priorities of North Dakota make them the appropriate first state for such primacy,” he said. “The EERC is proud to have been engaged with the NDIC regarding the development and deployment of CCUS technology and policy since 2003.”
Director of Mineral Resources Lynn Helms meanwhile said the approval opens the door for many other project applications, and not just for fossil fuels.
“The successful application of carbon capture yields enormous potential for many types of North Dakota energy,” he said.