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July Legislative Report Phil Murphy

Dear Constituents; Energy Development and Transmission Committee is the name of the interim (in between legislative sessions) committee that I am on. We meet more often than most – every month, because energy is obviously a big deal for our state. While much of this info can be gleaned from a careful look at our media, I thought I would give it to you straight from our meeting this week in Bismarck.   Probably all of you have heard that ND has hit the million barrel of oil per day mark and we will progress from that as the years go by. According to Niles Hushka, whereas a Bakken well cost about $12 million a few years ago, the average cost now is around $7 million. They are figuring it out. Predictability (99% of wells are successful) has brought in a lot more capital in the last few months, including investment banks. While flaring remains an issue, our state is making modest improvements in that regard – down from 33% to around 29% or so with predictions of 10% by 2020. Given the size of the play by then, the volume just burned off even if 90% is captured is a shame – Texas is at one %. To reduce the volatility of crude shipped by rail, the industry is increasing the amount of natural gas liquids stripped from the oil and much more closely monitoring the product shipped. This has increased the availability of propane although storage is a significant problem for that industry. On a side note, along with a few other legislators, I have been conferring/meeting with industry (Excel Energy, MDU, etc.) as well as state agencies (PSC, Commerce Dept., Pipeline Authority) to see how we can incentivize the spread of natural gas to rural communities. My hope is that if we cannot get natural gas to our Traill County and rural GF/Cass counties, we can at least free up enough propane in other rural areas of ND so that a continuous supply along with the stable price can be had here. No one wants a repeat of last year’s propane debacle.

You should also know that new pipelines are reducing the amount shipped by rail – from 80% in 2013 to about 63% according to the ND Pipeline Authority on Tuesday in Bismarck. It takes a while to build the gathering, transmission and distribution pipelines, but it is happening. Our committee has also helped to get the filter sock problem in hand – the low radioactivity has allowed room to explore and find areas for safe deposit within our state boundaries according to Dave Glatt of the ND Health Dept. However, pipe scale and other industrial waste will necessitate some collection of higher radioactive materials out of state eventually. Mr. Hushka, CEO of the oil services firm KLJ that is studying the scope of the boom for our committee, says that we can expect continued growth of permanent jobs in the oil patch predicated on available housing. One insider, not to be quoted, theorized that the formation under the Bakken (the Three Forks) could be much bigger than our current play, extending oil activity well beyond my lifetime and perhaps even our children’s. Our committee also heard from the director of the ND DOT and I personally discussed some of our local issues with him. The Upper Great Plains Transportation institute out of NDSU also presented on road and bridge needs in both the East and West of ND. They share their findings with the counties and we all know Traill has more than their fair share of bridge and road issues. They emphasized we in the Ag industry need to keep our loads within legal limits because of the inordinate damage done to roads by our bigger trucks – they also know too many of us ignore those limits.

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