Several federal agencies have announced that they will adopt additional regulations for the oil and gas industry this year. It appears that states are also weighing additional regulatory measures. North Dakota is contemplating legislation targeted at reducing the time oil companies burn natural gas from oil wells.
The bill proposal is sponsored by Senator Connie Triplett. If enacted, the bill would mandate that companies pay royalties and taxes on natural gas within fourteen days after an oil well starts production. Under the current system, companies need not pay royalties or taxes until a year after the beginning of production. If a company is found in violation of this bill, the bill authorizes the industrial commission to determine the amount of royalties to be paid by the company.
One of the motivations for this bill proposal, according to Triplett, is that the current regulatory system deprives mineral owners and North Dakota of revenue they should receive from the wasted gas. Over the past couple of years, flared natural gas has constituted approximately one-third of oil production in North Dakota. The percentage has decreased recently, however, due in large part to a policy circulated by state regulators last year.In July 2014, state regulators issued a policy encouraging oil and gas operators to reduce the amount of natural gas flared by 2020. If companies are unable to meet the flaring limits set by state regulators, the regulators have the authority to establish production limits.
Read the proposed bill.