Legislative Reports & Updates, Reports & Updates from Phil

Legislative Interim Report, Energy Development and Transmission Committee- Senator Phil Murphy

Legislative Interim Report, Energy Development and Transmission Committee- Senator Phil Murphy

This short report from our October meeting will try to partially give you the essence of where our state sits regarding energy.  We all can see statistics/factoids thrown out to us by the media regarding our energy situation, but as a member of the above committee I was in attendance as many major players came into the capital to present to us on Monday the 14th.  Following are some of the more memorable facts you may wish to be told or reminded of:   From Mr. Lynn Helms, Director of the Dept. of Mineral Resources, came a projection that it is quite likely we will soon be producing one million barrels of crude oil per day.  While the USA does export refined oil products, we do not export crude oil.  We import nearly 40% to fill our needs, producing around 61% ourselves.  By 2040 he projects that we will produce about 80% of our crude needs and buy around 15% of it from Canada and 5% from Mexico.   Best case scenario has him projecting ND at over 1.5 million bopd (barrels oil per day) by about 2017 and after around ten years at that level, slowly declining to around 1.1 million bopd by 2055.  Factoring the unpredictability of oil prices, demand, shifting regulation, etc., he projects ND producing about 1.1 million bopd down to around today’s level by 2055.    With our current permitting and the continued 185 or so drilling rigs in ND, it is going to take us about another 20 years to drill the state, at which time enhanced oil recovery (EOR) begins in earnest.  Please remember that we are recovering only 5 to 6% of the oil available in the formations at this time.  With EOR possibly moving that up another 10% using carbon dioxide as proppant and other new technology as yet unknown, we considerably expand our revenues.  This is a world class oil play.  Overall, Mr. Helms believes we can be energy self-sufficient before 2040 and turn our natural gas importing into exporting by that time, selling to Europe, Japan and Mexico.

The ND Pipeline Authority told us that we put in around2,500 miles of gathering and transmission pipeline into our state (enough to roughly stretch from LA to NYC) so that we now have 17,540 miles of pipe in the ground.  We are sending out about 28% of that product by pipeline and 64% by rail.  7% goes to our Tesoro Refinery and we truck about 1% to Canada.  Gathering the oil to get it to trains is done mostly by trucks at this time, although gathering pipelines are gaining ground as we try to reduce truck traffic.  Again, flaring of our valuable natural gas has stayed the same as a percentage (30%) but the oil play runs so fast in our state that the volume of flared gas has doubled in the last year.  The industry is publicly speaking about reducing flaring and new rules or legislation to that effect, so perhaps we can begin to significantly gain on the wastefulness which is regulated by the ND Industrial Commission’s Oil and Gas Division.  This young play has confounded the gas people who have often undersized their pipelines as the volumes of gas exponentially increases when the oil people go to “Ecopads” which places more wells on the same site.  Good for keeping new pads and roads from intruding on the land, but then the gas folks have to change their game to keep up with the added flow.  More gas plants are being built quickly and with new technology and cooperating with each other, gas companies will add to the 70% that is being captured.

Out of space here, I will say that we are now ranked 11th nationally for installed wind capacity with 991 turbines in operation with lease payments of $120,000 over a turbine’s life.  From the ethanol folks, we now produce over 350 million gallons a year and each bushel of corn produces 2.8 gal/ethanol, 18 lbs. of livestock feed.  We are ranked #1 in potential for biomass crops according to the Great Plains Institute.





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