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Dave Glatt

Dave Glatt, director of the North Dakota Department of Environmental Quality, told oil and gas industry leaders gathered in Watford City that strengthening regulations is critical to the long-term health of the industry.

WATFORD CITY -- Driving through Watford City to arrive at the North Dakota Petroleum Council’s annual meeting Wednesday afternoon, one thing stood out for Blu Hulsey, the group's chairman and a senior vice president for Continental Resources.

“It doesn’t look like a slowdown when you go through Watford City,” he said. “We have had a consistent growth rate, even in a slowdown.”

The comment was indicative of a thread woven throughout the NDPC meeting on Wednesday. The nation’s No. 2 shale play has arrived, and its oil and gas industry leaders are working to make it their steady Eddie.

“More than 60 producing companies are here today,” Conoco Phillips Williston Asset Manager Chris Malkin said. “And the companies here like their positions a lot. We have moved beyond the phase of establishing position, and we are moving into the phase of optimizing and improving our positions.”

Three technology trends are helping companies like Conoco Phillips solidify future prospects of the Bakken. Among these is an old technology that’s being applied in a new scenario.

The technology is called gas lift. The technique involves injecting compressed natural gas deep down into the well. That creates bubbles, lowering the density of the fluid, and helping it flow better.

“This is rapidly becoming the lift method of choice in our shale plays,” Malkin said. “Gas lift also presents an opportunity for a beneficial use of gas that may have otherwise been flared.”

Automated directional drilling is another technology boosting performance in shale plays, improving both safety and consistency of well performance.

Last, but not least, wells completed with old technology are are being re-stimulated with new technology. That's proving economic in tests, and could apply to hundreds of wells in the Bakken.

There are a number of areas where industry can begin to collaborate more closely to further strengthen Bakken prospects, Malik said. Namely, safety, water disposal, well interactions and developing workforce.

“We have a lot to learn from each other,” Malik suggested.

Perry Pendley, with the Bureau of Land Management, talked about how the federal agency is working to speed permitting and create a responsive agency with more boots out in the field.

To accomplish this, employees who had been working in Washington, D.C., are being moved to state and field offices, he said.

Mark Fox, chairman of the Mandan, Hidatsa and Arikara Nation, home to a large percentage of the state's oil and gas production, talked about the recent change in tax distribution.

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Fort Berthold has been an area of constrained takeaway capacity and processing for natural gas. This has in part been due to lengthy federal permitting processes, but another key element is building out infrastructure, Fox said.

Fort Berthold needs $2 billion to $4 billion in infrastructure, including pipelines, Fox estimated. The new tax distribution will put $30 million additional revenue for infrastructure into the tribe's coffers.

“The more tax we can retain, the more we can develop infrastructure like roads and water,” he said. “You have to have a lot of water to frack.”

Fox is among tribal leaders invited to the White House soon to discuss energy resources that lie in Indian country. His message there will be the same as the last time he was there.

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To get buy-in, it is necessary to defer to and allow the tribes to regulate their own lands, he said. Secondly, the tribes must be the primary beneficiaries of developing their own resources.

Fox exhorted everyone to keep communicating.

“When you draw the line and don’t talk, even if you disagree, even if you don’t understand why one side is saying what they are,” he said. “If you draw the line and don’t talk, you don’t get anywhere. Our nation has done our best to advocate for that and adhere to it.”

North Dakota’s Department of Environmental Quality Director Dave Glatt, meanwhile, said the long-term health of the oil and gas industry is tied to regulatory effectiveness.

His office is working on several fronts to improve and strengthen regulations. There is a new self-audit protocol, for one, his office is testing a device to more immediately tell when there is an emissions problem at a facility.

He's also working to improve the transparency of spill reports, after criticism emerged of the state's handling of data available online.

A new one-stop shop for companies to report spills is coming, he said. Until that comes online, however, he has directed that all open spills be reviewed and updated to ensure the online information is more current than it has been.

Glatt said while industry and regulators may feel they have it good right now, the industry cannot rely on that long-term.

Regulatory processes must be strengthened for the long-term health of the industry. The state must get away from embarrassing trends, like landowners being the first early warning for large pipeline leaks.

“It won’t be much longer in the future that the administration changes and that things are different,” he said. “We, meaning the regulatory agencies and the industry, have to be in a position to say we got this. We have it under control. We have control of our emissions. We are making money as an industry, and also taking care of the environment. If we don’t, we will have a hard time pushing back on those who say keep it in the ground.”

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