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Interim Energy Development and Transmission Committee Report

October 2015 Legislative Interim Energy Development and Transmission Committee Report (along with a smattering of other activities) by Senator Phil Murphy

Our EDTC met on Tuesday, October 13 at the National Center of Excellence on the campus of Bismarck State College. On the agenda was our participation for the full day of the 2015 Great Plains and EmPower ND Energy Conference. We heard from our US Senators as well as our Governor and Atty. Gen., the head economist from Conoco/Phillips, Lignite Energy Council and others. The oil and gas industry is essentially upbeat for the long term (the next 80 years) as efficiencies increase even while rig counts are down (183 last November, 68 now) and some companies are pulling out (most notably Occidental this past week). Some facts I pull out for your edification: In ND we have 13,016 active wells, 10,367 of which are Bakken/Three Forks. We have 993 wells waiting on completion (done but yet to be fractured), 2,023 permitted, with 55,000 to 65,000 ultimately expected to be piercing our oil shale. Over last year, initial production and estimated ultimate recovery is up 20%. Well costs are down 11% and operating costs down 14%, for a total reduction of 25% from last year. But oil price is down 50% as we hang in there with very little reduction from the 1.2 million barrels a day our state produces.

An “all of the above” energy program is what we all say we support and here are a couple of interesting facts to that end; In 2002 we produced no Megawatt hours from renewables other than the hydro from the dam – now it is about 16% of retail electricity, almost all of it wind. I think there are about 1,500 towers in ND. Our lignite coal industry is afraid of what will happen when the new Federal rules for emissions kick in, so they are preparing lawsuits against the EPA and probably the BLM (Bureau of Land Management). I see the biggest opportunity for them to capture CO2 economically by pairing with the Oil and Gas industry which can use carbon dioxide for enhanced oil recovery down the road. Nor are our energy companies happy with the US Fish and Wildlife Service who continue to add and propose adding new candidates to the list of endangered species. Kari Cutting with the ND Petroleum Council, testified that “industry doesn’t object to listing species as threatened or endangered as long as the decision is based on sound science”, but she went on to decry the FWS using old science and studies and said it was driven by environmental groups using sue and settle tactics. I guess that is called pushback to our oil and gas activity and it is to be expected to say the least. It does not seem to me that anyone cares for regulation – from the child told to get their hand out of the cookie jar to teenagers, farmers, banks or oil – you name it. Maybe it is the price of being in a federal system – there will always be struggle between the states and the national government. The civil war did not settle it…

On the second day we heard from many of the same industries as our committee held hearings at the Capitol. The most significant departure from the norm came in the form of hearing about “Behavioral Health” issues. Back in the day, we would have called them mental health issues, but we have a newer term now. What is our committee doing hearing from Social Services Directors from the oil patch, the head of our State Hospital and our Director of Dept. of Corrections? I will have to write about that later. I did attend the ground breaking for the anchor tenant of Grand Sky on the GFAFB last week – it is Northrup Grumman with a $10 million building (possibly up to 3,000 jobs), as well as the grand opening for the Reynolds United fertilizer plant in Buxton – Congratulations! And the NDSU Extension Round Table event in Hillsboro a couple of weeks ago – the biggest demand identified was for child care which is a workforce issue amongst other things. I am working on it.

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