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About Sid Pranke

I moved to Dickinson in western North Dakota in late June 2012 from St. Paul, Minnesota. Though I was born & raised in North Dakota, I haven't lived here since high school. I am of German-Russian heritage, and my ancestors settled here in the late 1800s. With this blog, I hope to rediscover my home state and document my time here during a historic oil boom.

No end in sight to rent gouging

After Lori Patrick’s letter to the editor appeared in the Nov. 15 issue of The Dickinson Press, it appeared that she and her husband were being forced out for good from western North Dakota because they could no longer afford their rent payment of $1,700 a month. Here’s an excerpt of her letter:

“This is just a word of advice to people who are potentially thinking of coming to Dickinson; don’t do it unless you are in the oil field or supporting the oil field jobs.

For the simple folks who work at the schools, restaurants, stores and such, it’s just not worth it.

Both myself and husband have decent jobs but we simply cannot make it here due to the greedy local landlords trying to capitalize on this boom.

I work two jobs and my spouse works one, although it is fair money with good benefits we can’t make it here anymore. After one year of struggling here, we have to give them up and go home to an impoverished area with no employment whatsoever. I find this to be ridiculous and heart-wrenching.

Shame on the gougers of this area, taking every penny one makes just to have a place to live. We are so much further in debt than when we came out here….

So in closing, all I can say is beware, this is a very hostile, money hungry, disrespectful, no rights-for-tenants town.

How disappointing this area has become. I am sure at one time this was a wonderful community that one could make a living at and be proud to be a member of this town that cared about their people. After speaking to several senior citizens, I find it terrible that they fear for their own housing and are also being forced to leave their own homes after being here their whole life. Shame on the greed. Thank you for listening to my story.”  – Lori Patrick

I contacted Lori recently to get an update on their situation – I was both curious and concerned. She took a courageous step by sharing her story with many readers in the same situation she was in, and I wanted to find out how she was faring.

(Photo by Sid Pranke)

When I spoke with her in early December, Lori had just returned to North Dakota after a 14-hour drive from Michigan, where she and her husband still own a home with $320 a month payments. She had to take of some financial matters while in Michigan, but she had returned back to the Dickinson area because they found an answer to their problem.

Someone they had previously contacted about rental housing had seen Lori’s letter to the editor, and called to say he had a trailer they could rent from him for $1,100 a month.

“Two months before I even wrote that letter (to the editor) we had looked at this place (the trailer) and it was hopeless. It needed plumbing and electric and all that stuff. So I gave up on that and two months went by until I wrote that letter,” she said. “He called and said he was getting the trailer all ready so we should come out and see it and talk, so that’s what we did and we negotiated a workable price. It’s still high, but it’s not like it was.”

Lori wants to hang on to her home back in Michigan as her backup plan, plus she said home sales are sluggish there. “If I can’t make it here, I need a place to go to retreat,” she said. “You just don’t know what’s going to happen down the road.”

Before they found the trailer option, Lori and her husband lived in the top of a house, with noisy neighbors living below them. “We’re in the country now – all we have to worry about is cow,” she said, laughing.

I asked Patrick to describe her former landlord – she said she strongly believes he was motivated by pure greed. She said she begged him to lower their rent to $1,200.

“He wouldn’t budge. He said, ‘you knew how much it was when you moved in here.’ We’re not oilers, but they’re gouging the oilers, too, it’s not just us. It might not hurt them as much because they get company housing,” Lori said. “But for people like me and my husband and friends I know, you can barely make it here. Like I said to my husband, look at the price we have to pay just to be two productive, working human beings.”

Lori and her husband lived in the Gillette, Wyo. for part of the oil boom there, and they both agree that rent gouging is much worse in the Bakken. “There (Wyoming) $1,000 a month was considered gouging,” Patrick said. “Here, they’re just crazy.”

The Bakken area is providing many jobs to those who can’t find them elsewhere. But the housing situation has been way out of hand for several years now. Rents have doubled and tripled almost everywhere in western North Dakota. I doubt one article (or 1,000) articles will shame many landlords into lowering the rent on apartments, mobile homes and houses. And N.D. state law prohibits rent control on private property. The North Dakota Housing Finance Agency does what it can to help provide affordable housing, but it’s not enough.

What’s the answer? If you have ideas on this topic or, please add a comment.

2nd update on December liquid diet progress

Well, I’ll cut to the chase — I’ve lost 10 inches as of last night, including two inches off my waist since Dec. 2. I have five days left on this all-liquid diet, including today, and I vacillate about whether I want to stop it on Saturday night instead of Sunday night to make it a full 14 days.

The logic behind this Almased-based diet is this: if people see quick results right away, they are much more likely to stay motivated to reach their goals. That has certainly been true for me so far. Instead of grabbing a big handful of potato chips when I get home from work (my big weakness), I now grab a tape measure instead.

Almased is a non-GMO powder made of fermented soy protein, probiotic yogurt and honey. In the morning, I have been adding an organic banana to my breakfast shake, plus a dash of vanilla, half a packet of zero-calorie sweetener Stevia (available at many stores) and a teaspoon or two of flax oil (you can also add olive or canola oil instead to make sure you get your good fats and Omegas 3s every day).

Almased isn’t cheap, but you can get it cheaper online, and with shipping costs it’s about $30 for 4-5 days of shakes. I only have one tin left to make it through the rest of my diet, so I’m hoping the local health food store is restocking it since I bought the last two tins over the weekend.

I “cheat” on the diet every day with a mug of Ghiradelli hot cocoa mixed with milk, not water. It is so good and I have something to look forward to at the end of the day. As I mentioned in a previous post, I also have had an occasional “beer juice.”

My energy levels have mostly been absolutely great — and on those few occasions I feel myself start to lag, I grab a cup of organic black tea or herbal lemon/ginger tea, which also is considered a detoxer.

I hope to see at least a drop of about seven more inches overall before the end of the all liquid diet — I’m not sure if that is unrealistic. After that, you’re supposed to substitute one or two meals per day with an Almased shake — I’ll see if I end up doing that. At this point, I’m not sure about that. But it sure does feel GREAT to have started my New Year’s Resolution BEFORE the New Year starts — no holiday cookies for me, because I swear if I have one, I’ll have 10 of them. So instead of having to feel guilty about that, I feel energized by the possibilities for getting in great shape again.

Be ready for anything: Winter Driving in the Bakken

By Sid Pranke

Bakken-area drivers already got an early taste of possible things to come this winter – in mid-November, icy roads led to travel advisories, numerous accidents and tragically, several deadly crashes.

North Dakota got a break last winter, with little snow and unseasonably warm temperatures.

Though the elements often defy prediction, near normal levels of snowfall are expected this winter for North Dakota, according to the National Weather Service’s climate outlook for the December to February winter season. And the online version of Old Farmer’s Almanac predicts North Dakota’s snowiest periods will be mid-December, early February and early March. We’ll see how that goes.

During that first big winter storm of the season, Sgt. Darcy Aberle of the N.D. Highway Patrol’s Northwest region in Williston, said area troopers out in the field noticed some avoidable problems.

There was no travel advised, but Aberle said troopers were still seeing oilfield companies sending their workers out to work.

“Companies were acting as if it was a regular work day,” Aberle said. “When we see no travel advised, we’re basically saying ‘stay off the roads’ unless it’s an emergency to get to a hospital or something like that.”

Aberle said he hopes the word gets out about travel advisory warnings. “We did stop and talk to a lot of the truck drivers that were stuck” and told them they shouldn’t have been on the roads at all with the poor road conditions, he said.

Trucks with heavier loads have better traction, but Aberle said that’s a double-edged sword.

“You have more pressure down on the roadway to get moving and go faster, but with that weight it’s tougher to stop,” Aberle said.

A lot of the trucks troopers see aren’t carrying tire chains to use when they’re needed, according to Aberle.

“In North Dakota and the Badlands especially, it can be a nice day but there might be a hill they have to go down and without chains they might not get out of that location,” Aberle said.

If drivers hold a commercial driver’s license (CDL), it’s more likely they’ve received training in winter truck driving that included instruction about the use of tire chains for winter driving. But what drivers learn in hands-on training can depend partly on what time of year it is when they take a CDL course, said TrainND’s CEO Deanette Piesik. TrainND offers year-round CDL training.

“People in the CDL class now are getting instruction on winter driving,” Piesik said. “In the summer, they (students) get instruction on heat and how that affects the trucks as well.”

Piesik said they use full-size semi-trucks with trailers for their CDL classes.

“Because that’s what they (students) have to test in, in order to get their CDL,” she said.

TrainND’s CDL-preparation course is three weeks long and covers speed, space management, chaining up and chain removal, and ice buildup issues on trucks, Piesik said.

“If the ice builds up, it can knock off air lines and electrical lines on the truck and trailer hookups,” she said.

A variety of students enroll in TrainND’s CDL classes, Piesik said. “We work with some companies who send their new hires – people who don’t have their CDLs, and then we have people who come in off the street who’ve got the money to get the class,” she said.

And for all drivers, having tire chains in your vehicle isn’t enough; you have to know how to use them.  “That’s the big thing. If you do have tire chains, practice putting them on and taking them off,” Sgt. Aberle said. “What we see lots of times with new people that are up in North Dakota, is they go out and buy tire chains, but they’ve never taken them out of the bag.”

Aberle said the Highway Patrol used to carry tire chains in their vehicles, but not anymore. “We have enough 4-wheel drives so we just run with those,” he said.

If you’re moderately adept with using tire chains, it will take about 10 minutes per tire to put on chains properly, and if your vehicle has 4-wheel drive and you still want to use tire chains, you can get away with just using two of them, Aberle said.

North Dakota’s highway conditions and maintenance

Aberle praised the way the North Dakota Department of Transportation takes care of highways during winter. He cited his own recent road trip as an example. He traveled to Colorado the day after the Nov. 10 storm.

“I drove on solid ice all the way through Montana and never saw a plow,” Aberle said. “Solid white ice the whole way through Montana, and North Dakota’s road were clean.”

Aberle said he just took his time and adjusted his driving to the conditions. “That might be 20 miles per hour on a 65- or 75-mile-per-hour road, but if that’s all it allows, that’s the speed you have to go,” he said.

Aberle recommends drivers more than double the normal traveling distance behind other vehicles. “You don’t know exactly how icy it is at times. Double might suffice for making a quick stop and not hurting somebody, but you might as well play it safe and stay back even further,” he said. “That also gives you a little more reaction time.”

Due to the predicted icy conditions, highway maintenance crews were pretreating highways before the Nov. 10 winter storm, said Larry Gangl, Dickinson district engineer of NDDOT.

“Pretreating works well but it doesn’t work in all cases. Mother Nature in certain storms will win – it’s going to stick no matter what you do, but you try to minimize that,” Gangl said. “If it sticks, it may not stick as hard and come off easier the next day.” Gangl said NDDOT tries to stay as aggressive as possible to prevent poor road conditions due to snow and ice. “But there are times when they’re going to be that way, no matter what you do,” he said.

NDDOT follows a protocol of treating roads in the winter, Gangl said. If snow is predicted, crews report to work earlier than usual. If the normal start time is 6 a.m., crews come in early at 4 or 5 a.m. Maintenance trucks, such as those used for anti-icing, have set routes.

“Generally, we start with our highest-priority roads, which are the roads with the most traffic,” Gangl said. “The interstate system is the highest priority, then we work on our U.S. highways, which are highways 12 and 85, then we go down to our state highways like Highway 22.”

For roads with snow and ice on them, NDDOT generally plows first, Gangl said, “because the salt/sand mixture we’re using won’t work unless you get the snow off first.”

NDDOT puts down either a sand/salt mixture or straight salt, depending on conditions. “How much you put down is based on what’s on the roadways, as far as ice cover, ice thickness, that type of thing,” Gangl said.

Road safety issues

High traffic on Bakken roads and highways has been well-documented, but Highway Patrol officers trying to enforce the laws face similar dangers that all drivers do. When asked if icy  road conditions and a lack of approaches or wide shoulders on Bakken highways prevent him from doing his job the way he’d like to do it, Aberle (who patrols in the Williston area) said it does.

“That’s one of the issues we have with a few of our roads – we have no shoulders on them. If the vehicle doesn’t stop at an approach or if we aren’t near an approach … if I don’t have an approach where I think I can make a safe stop, I’m probably not even going to stop the vehicle,” Aberle said.

Highway 85 closer to Williston has added passing lanes and has wide shoulders, but from Belfield to Watford City there are no passing lanes and few approaches. Plans are in the works for improvements on that stretch of Highway 85, but officials say the plans could take several more years to implement.

Aberle said the Highway Patrol has started training with approaches on the passenger side of vehicles, “so we’re actually in the ditch,” he said.

In addition, NDDOT’s Gangl said his department works with the highway patrol to coordinate on areas to develop for pulling trucks over.

If drivers feel unsafe on area highways (such as if they see a big truck barreling down behind them in the distance), consider pulling off the side of the road to let the truck pass.

“If they (drivers) feel it’s their safest bet to pull over and allow the traffic to go by, we’re all for that,” Aberle said. “I’m not going to tell people they have to pull over, because it’s not state law to do it.”

First update on my liquid diet progress

It seems a little strange to be blogging about hard news one day and my diet progress the next. But as promised, I am providing an update every few days on my diet. The first few days were psychologically difficult; I kept thinking about potato chips (my biggest weakness). I knew I couldn’t have any — plus, I thought if I did have even a few, I would end devouring a whole 10-ounce bag of them.

This is what I am “eating” every day for 14 days (now on day 5):

Breakfast — 1 10-ounce Almased shake (I add an organic banana, vanilla and a teaspoon of flax oil to the blender as well and maybe a sprinkle of Stevia). Almased is a powder made of fermented soy protein, probiotic yogurt and honey); big cup of organic black tea.

Lunch — 1 10-ounce Almased shake (without the banana); mug of clear vegetable broth (low-sodium)

Dinner — cup of low-sodium V-8, mug of delectable hot cocoa with milk (my version of cheating — but I need my daily chocolate somehow, plus it gives me something to look forward every day).

Two hours before bedtime I have another Almased shake. I feel really good on this diet; I don’t feel sluggish during the day and I have lots of energy, even in the early morning. Sometimes my stomach grumbles, so I have to eat lunch right at 11 a.m. and dinner right about 5 p.m.

I don’t weigh myself; instead I use a tape measure and record all my measurements by date and then see how I’m doing. I have lost 1 1/2 inches off my waist since Sunday night, plus more inches everywhere for a total of about 5 inches in 5 days. My tightest jeans fit much better (it’s casual Friday so I’m wearing jeans today).

One of my colleagues & I were discussing how we’re both the type of people who have a hard time making a batch of cookies or brownies, because we want to eat them all by ourselves pretty quickly. I don’t like this about myself, but I have to accept it and avoid making baking goodies at all costs.

Nine days to go with my all-liquid diet — as a reward for completing it, I’m flying to a Florida beach on Dec. 18 — woo hoo!

Bakken freaks take note: Continental Resources drills to third bench of Three Forks

As I did my usual scour for all things oil and gas on Dec. 4, I came across this item, a new drilling milestone for the Bakken. If you keep track of Bakken developments like some people are sports fanatics, the press release below from Continental Resources’ website was made for people like you. Dec. 6 update: I interviewed the DMR’s Lynn Helms this morning and asked him about the development below. His response was “I can’t tell you much, because the well’s on confidential status. But yes, I knew that we had done a case which would allow them to test that expanded Three Forks pool and had permitted a well for that, as far as any results I can’t speak to them. They can tell you anything they want.” — Fresh Mojo’s Sid Pranke

OKLAHOMA CITY, Dec. 3, 2012 — Continental Resources, Inc. (NYSE: CLR) announced today it successfully completed the Charlotte 3-22H (91% WI), the first horizontal well to test the third bench (TF3) of the Three Forks zone in the Bakken field of North Dakota and Montana.

The Charlotte 3-22H flowed 953 barrels of oil equivalent per day (Boepd) at 1700 psi on a 28/64 choke in its initial one-day test period. Located in McKenzie County, North Dakota, it was drilled to a total depth of 21,324 feet, including a 9,701-foot lateral section, and was completed with Continental’s standard 30-stage fracture stimulation design.

“We’re very pleased with the initial performance of the Charlotte 3-22H,” said Harold Hamm, Chairman and Chief Executive Officer. “The well has been producing for 15 days and its performance compares favorably with other first bench (TF1) and second bench (TF2) producing Three Forks wells.”

Continental has been a pioneer in the discovery and development of the Three Forks reservoir in the Bakken field.  The Company was the first to demonstrate incremental reserves from the TF1 in 2008 and the first to establish commercial production from the TF2 in 2011. Establishing production from the TF3 is yet another significant milestone in the growth of the Company’s assets in the world-class Bakken oil field. If the Charlotte 3-22H continues to perform in line with the second bench Charlotte 2-22H, it will be the first well to establish commercial production in the third bench.

“This could be a real game-changer,” Mr. Hamm said. “The Charlotte 3-22H is the first well in a 14-well program that we plan to complete by year-end 2013 to test productivity of the second, third and fourth benches of the Three Forks over a broad area of the play.”

The 1280-acre Charlotte unit is the first unit in the Bakken field to have wells producing from three separate horizons – the Middle Bakken, TF2 and TF3 zones.

Continental estimated in late 2010 that the Bakken field would eventually yield 24 billion barrels of oil equivalent (Boe), based on technology available at that time. This estimate included 20 billion barrels of oil and 4 billion Boe of natural gas, and assumed 577 billion barrels of original oil in place in the Bakken and TF1. With the addition of oil found in the lower Three Forks benches, which includes the TF2, TF3 and TF4, the Company now estimates the field has 903 billion barrels of original oil in place, a 57 percent increase.

“The successful completion of the Charlotte 3-22H is another step in our efforts to assess the productivity and reserve potential of the lower benches of the Three Forks which is one of the goals of our 2013 drilling program” said Jack Stark, Senior Vice President of Exploration.  “The results are very encouraging and indicate there may be upside to our estimate of 24 billion Boe of recoverable reserves for the Bakken field.”

 

Starting a diet today to beat the New Year’s Resolution rush

About five years ago, my metabolism betrayed me. I don’t eat any more than I used to, but it’s a frustratingly slow process for me to lose weight. I usually eat about 500 calories for breakfast, 600 calories for lunch, 600 calories for supper and 300 calories in snacks. So when I exercise regularly, I tend to lose about .005 pounds a week. No wonder I can’t stay focused on my diet very long — I need more tangible, rapid results than that. Keeping it safe and meeting nutritional needs is also a factor.

In 2000, I dropped 25 pounds in two weeks by going on an all-juice diet — I even had an occasional beer “juice.” It seemed the all-juice diet reset my metabolism, because I did not gain the weight until 2003, when a complicated appendectomy left me bedridden for several months.

Ever since then, I haven’t been able to drop the extra weight. I’m going to a Florida beach for the upcoming holidays so I decided to beat the New Year’s Resolution rush by starting my diet today. It’s called the Almased diet, where all you get to eat for two weeks is liquid. You get an Almased shake three times a day and you may snack on vegetable broth. I may still have a beer and hot cocoa, I haven’t decided yet. Almased is a soy & honey fermented protein powder available at health food stores or online. It’s supposed to bring you fast results and also reset your metabolism — both things I really need.

I will keep you updated on my results every few days — hopefully it will bring me motivation if I have to be accountable for sticking to the diet. If there’s anyone out there who has tried Almased to lose weight, let me know.

On another note, Areavoices sponsors this blog and also recruits bloggers. We want more people to follow us on Facebook, so if you’re so inclined, go to https://www.facebook.com/areavoices and “Like” us. If you’d like to start a blog, let me know that too.

Natural gas generation to skyrocket in state

The chart shows projected natural gas growth in North Dakota, based on low, base and high estimates of how much will be produced – depending on drilling activity levels. Bcf/day stands for billion cubic feet per day. (Source: Bentek Energy – Natural Gas Study of Williston Basin)

Energy Shifts & North Dakota’s future

BY SID PRANKE

Recent headlines in North Dakota can send mixed messages when it comes to predicting the direction of North Dakota’s energy future – “Demand for electricity in Oil Patch projected to triple;” “North Dakota lags at bottom in energy efficiency study;” “Warm winter forecast, low natural gas prices expected to help keep heating costs down.”  And all those headlines happened only in the past two months.

Much of the increased demand for electricity in the Bakken will be from industrial usage – high estimates are for 40,000 oil wells in the Oil Patch by 2032. According to Dale Haugen, general manager of the Mountrail-Williams Electric Cooperative in Williston, every oil well requires the same electricity as three farmsteads.

Where is the oilfield electricity used?

The mechanisms that “get oil and gas out of the ground and then transport it to where it needs to go” will create the larger electrical needs in the Oil Patch, said Mike Wamboldt, director of energy services for KLJ in Bismarck.

Wamboldt was project manager of the recently-released study “Williston Basin Oil and Gas Related Electrical Load Growth Forecast” and KLJ participated at a recent energy conference that focused in part on the jobs and industry that natural gas is expected to create here, and the efforts to keep those resources in the state.

Well pumps, pipelines, oil booster pumps, compressor stations, heaters, transfer pumps all run on electricity, Wamboldt said. “Generally, they (oil producers) try to hook up well pumps to the electrical grid as soon as they can. Quite often, once they get the well in the ground they’re operating off of diesel generators until the electrical utility can get out there and get them hooked into the grid.”

Electrical production now

According to a North Dakota State University Central Grasslands Research Extension Center energy report, coal-fired plants now produce the bulk of electricity used in North Dakota.

That holds true for Basin Electric Power Cooperative, which serves 2.8 million electric customers in nine states, including western North Dakota and eastern Montana.

Basin Electric’s most recent statistics for the source of energy generation capacity break down as follows:

• 60.2 percent comes from coal – either from plants the cooperative owns and operates or bought from other plants

• 14.7 percent comes from renewables (including wind power)

• 9.1 percent from natural gas-fired stations

• 6.1 percent hydro generation

• 1.5 percent nuclear

Shift to Natural Gas

Industry forecasters predict a shift away from coal and toward natural gas, and oil companies seem to have a jump on the trend.

As Rocky Mountain Institute co-founder and scientist Amory B. Lovins writes in the 2011 book “Reinventing Fire:” “Many oil companies seem ahead of their counterparts in the older and more traditional coal industry, which is already losing to natural gas for electricity generation and could be entirely replaced by renewables and gas in the U.S. by 2050.”

KLJ’s Wamboldt said it’s a big issue right now. “The electrical utilities are currently in the process of putting together plans to deal with the increased demands. From what I’m seeing in the industry, we’re seeing more and more regulatory scrutiny on the coal and an increased supply of natural gas from these shale plays,” he said. “We’re starting to see a huge resource in natural gas, so right now it appears there’s a tendency to move toward natural gas-generated power.”

In preparing for the increased demand in western North Dakota, along with increased natural gas usage, the future is right now.

Basic Electric spokesman Daryl Hills said the group has two natural gas stations under construction, one west of Watford City and one northwest of Williston. Both facilities will be used to produce electricity, he said.

“There is a growing demand for electricity in western North Dakota and eastern Montana and it’s growing at a fairly quick rate. One of the quickest ways to meet that demand is to build gas-fired generation stations, like we’re doing,” Hill said.

Construction began last June and the facilities will be up and running by mid-2013, he said.

The gas used at Basin Electric’s new western North Dakota plants will be piped in on existing pipelines, Hill said.

Unlike the relative speed of natural gas startups, the decision to use coal would take longer. “It’s different if you’re going to build a coal plant, because it just takes longer to do the permitting. It takes longer to do the construction,” Hill said.

Efficiency initiatives

As the Bakken market moves toward cleaner, plentiful and less costly natural gas, the state could be seen as dragging its feet on energy efficiency initiatives.

That’s especially noticeable reviewing the results of the 2012 energy efficiency nationwide report by the American Council for an Energy-Efficient Economy (ACEEE). North Dakota came in at the bottom of the study’s ranking, ahead of only Mississippi.

North Dakota’s highest-ranked neighboring state was Minnesota ranked at No. 10 overall.

The report ranks states on energy efficiency policy and program efforts; it documents best practices; and provides ways for states to improve its overall energy efficiency.

The report stated that while North Dakota (along with Kansas and Wyoming) was not among the most-improved states since last year’s report, it did improve its score “significantly on a percentage basis.”

The ACEEE report recommends ways for states to improve its overall ranking:

• Put in place and adequately fund an energy efficiency standard or similar savings target.

• Adopt updated building energy codes and enable the involvement of utility program administrators in building code compliance (since buildings consume more than 40 percent of total energy).

• Adopt stringent tailpipe emissions for cars and trucks.

• Put in place sustainable funding for state government-led energy efficiency incentive programs; invest in energy efficiency-related research, development and demonstration centers.

Twenty-four states have adopted and adequately funded an “energy efficiency resource standard,” which sets long-term energy savings targets and drives investments in utility sector energy efficiency programs, ACEEE states in its report.

To see the online report, visit aceee.org/research-report/e12c.

State agencies clash over review of proposed 1280-acre well unit near Killdeer

By Sid Pranke

Killdeer, ND area map

When it comes to historical preservation concerns over proposed drilling at a 1,280-acre Little Knife leasing unit near the Killdeer Mountains, oil development trumps cultural and archaeological interests, because the state follows an 1988 Attorney General precedent.

Issued on Oct. 3, 1988, by North Dakota Attorney General Nicholas J. Spaeth, the precedent known as “Attorney General’s Opinion 88-23” can be viewed online at ag.state.nd.us/Opinions/1988/Formal/88-23.pdf.

The opinion was given at the request of James E. Sperry, who was then superintendent of the N.D. State Historical Society.

An excerpt of the opinion reads: “It is my further opinion that the Board of University and School Lands may deal with historical, archeological, paleontological artifacts and sites without supervision of the State Historical Board, when such supervision would conflict with the Land Board’s fiduciary responsibilities to trust property.”

A more commonly-used name for the “Board of University of School Lands” used today is the North Dakota Department of Trust Lands.

The opinion ends with the following statement: “This opinion … governs the actions of public officials until such time as the question presented is decided by the courts.”

Rancher Loren Jepson, who opposes drilling near his property, as well as lease operator Hess Corp., have both hired attorneys to represent their interests in the matter, but it’s too soon to tell if the precedent will be tested in court over this case.

A recommendation by the state is expected at a Industrial Commission meeting in Bismarck sometime in December.

Attorney Chuck Peterson of Mackoff Kellogg Law Firm in Dickinson, who represents Jepson, said the protection of cultural interests in the area are a concern, since many Native American artifacts have been found in the area.

At the initial Oct. 24 IC Oil and Gas Division hearing, Hess Corp. legal counsel John Morrison of Crowley Fleck objected to Jepson’s claims of artifacts in the area, saying Jepson wasn’t an archaeologist or paleontologist.

In a Nov. 6 interview, North Dakota Director of Archaeology and Historic Preservation Fern Swenson said a thorough review of the 1,280-acre site has not been done, and that it would take her department at least a month to do that, given current staffing levels at the agency.

In addition, Swenson said in the past, the state has used federal grant money from the National Park Service to fund a survey of state fands such as the Killdeer area land. To receive the grant money, her department “would come up with a scope of work. We would identify some areas that needed to be surveyed,” Swenson said.

According to North Dakota State Land Commissioner at the N.D. Department of Trust Lands Lance Gaebe, neither what Swenson describes as a “thorough review” or a federally-funded survey of the land are remotely likely to take place.

When asked to comment on the information Swenson provided during an interview, Gaebe stated that it appears that he and Swenson are not on the same page.

“I guess that there’s a whole new threshold they’d (the State Historical Society) like to put in place is something that I have to evaluate,” Gaebe said. “I guess I believe that we (his department) have made those allowances based on the correspondence and the recommendations we’ve already gotten (from the Historical Society).”

Gaebe said if the State Historical Society were to make a formal request that the department needs more time to look at the Killdeer-area site, “I would say we would sure try to facilitate that review. We do site inspections and they can sure join us in those reviews. I don’t have the luxury of time in a lot of cases.”

Given the rapid pace of drilling in the state, Gaebe said he has “pressure every day from (oil) operators that want this done yesterday. Because they’ve leased these things on time frames and if they don’t have drilling activity by the end of leases, the leases go away.”

Though he dismisses the possibility of a more lengthy or federally-funded review for the Little Knife leasing unit, Gaebe defends what his department has recommended.

“We’re away from the known battlefield as far as we’re able to be and still be on the spacing unit. We’re as far away from those sites that the Historical Society identified and we’re on some of the flattest ground on that particular spacing unit,” he said. “Not to say there couldn’t be a week’s long inspection, but my point is we’ve taken great pains to avoid all the areas that we are aware of.”

Jepson’s attorney, Chuck Peterson, said his client is asking Hess Corp. to move its planned wells to a different location that is less disruptive and safer, citing traffic and dust concerns along with historical and cultural ones. Peterson said Hess Corp. needs to “address more factors than ‘this is just the easiest place’ to drill their wells. They need to consider the impact their plans have on all the people that live in the area, as well as the public who use these last remaining public lands in this area.”

Hess Corp. officials provided a comment regarding the proposed well controversy, but then retracted its statement after learning The Drill’s policy of providing specific attribution to comments. Hess Corp. wanted to attribute its comments to a “company spokesperson.”

New York-based Hess reported estimated third quarter profits of $557 million, up 87 percent from $298 million during the same period in 2011. The increase was credited to resumed operations in Libya and growing production from the Bakken. Production from the Bakken oil shale play in North Dakota increased to 62,000 barrels of oil equivalent per day, up from 32,000 in the third quarter of 2011.

Shedding Light on Stripper Wells

Contention over taxes on ND’s “marginal” well production

By Sid Pranke

With the 2012 election cycle now over, newly-elected and incumbent North Dakota lawmakers will begin politicking at the State Capitol when the next legislative session begins on Jan. 8. One issue likely to be parsed again this regular session is how North Dakota taxes the oil industry. A contentious topic is current state tax law governing oil wells and well properties designated as stripper wells or stripper well properties. A stripper well is described as a marginal, low-producing well that exempts oil producers from the state’s 6.5 percent oil extraction tax. Oil from stripper well properties only are subject to the state’s 5 percent oil production tax.

Critics of the extraction tax exemption on stripper well properties contend that new fracking technologies have created high-producing wells on many stripper properties, and that the tax law has become a loophole tempting for oil companies to exploit.

Tax laws exempting these stripper wells were enacted decades ago, long before hydraulic fracturing technology allowed for the Bakken boom.

The statute that defines stripper wells and stripper well properties has three categories to qualify: Over a 12-month consecutive period – wells at a depth of 6,000 feet or less that did not exceed 10 barrels of oil per day; wells at a depth between 6,000 and 10,000 that did not exceed 15 barrels per day; and wells more than 10,000 feet that did not exceed 30 barrels per day. Bakken wells generally are at a depth of roughly 10,000 to 11,000 feet.

In fiscal year 2011, 43 percent of oil-producing wells in North Dakota were qualified as stripper wells, according to statistics from the North Dakota Office of State Tax Commissioner. Of those designated stripper wells, 261 wells were considered high-producing wells that produced more than the limits established by statute. Most of the 2011 high-producing wells designated as stripper wells were operated by Continental Resources Inc., followed by Denbury Onshore, LLC.

During the 2011 legislative session, State Sen. Ryan Taylor introduced a bill that would close the loophole for high-producing stripper well properties, saying that the state is losing significant revenue that could further benefit oil-impacted areas. Lost revenue based on the stripper well extraction tax exemption was estimated at about $60 million in 2011. Taylor said he thinks that figure is twice as high now, due to increased oil production in the state.

Taylor said in a recent interview he has no problem with the stripper well tax exemption as the law was originally intended.

“They were low-producing wells and they lived out their life. We wanted to ‘incentivize’ them, getting that last bit of oil if they got below 30 barrels a day,” he said. “And then somewhere along the line, they added stripper well properties and that means the spacing unit.”

Taylor said a common spacing unit size is 1,280 acres. “If there’s a stripper well on those 1,280 acres, then any new well on those whole 1,280 acres gets the same incentive, and that new well might flow at 500 barrels a day,” he said. “And even though it’s not a stripper by any means, it’s 500 barrels a day and it’s paying 5 percent (in oil taxes) instead of 11.5 percent.”

Three Republican state senators (Stan Lyson, John Andrist and Gary Sukut) co-sponsored Taylor’s 2011 bill, but ultimately did not support it. “They bailed on us,” Taylor said. “They understood it at first, but for whatever reason, the support evaporated,” adding that political pressure was probably a factor.

Ron Ness, president of the North Dakota Petroleum Council, testified against the 2011 bill. Both then and now, he believes changing the exemption for stripper well properties would represent a tax increase, not close a so-called loophole.

Ness said during his 2011 testimony that production from “marginal” stripper wells account for 8 percent of North Dakota’s oil production. “Marginal oil wells represent 18 percent of our nation’s domestic oil production,” Ness said during his testimony. “This bill does not encourage investment.”

The bill also was opposed by the North Dakota Chamber of Commerce – the group also views getting rid of the exemption as a tax increase. Bill Shalhoob, who represented the Chamber during legislative testimony in 2011, said, “It is a tax increase at a time when state coffers are substantial and we should be cutting taxes, not raising them to create more excess revenue.”

The N.D. Petroleum Council plans on trying to revise oil tax laws during the next legislative session, but its focus will be on making oil tax laws “simpler and more competitive,” Ness said.

One plan involves trying to make overall oil taxes less tied to the current price of crude oil, Ness said; the group wants to make oil taxes more of a flat tax. His group will help craft legislation to that effect by early January, Ness said.

Taylor insists the oil extraction tax exemption for stripper well properties is a loophole, one that doesn’t fit the times of a booming North Dakota. In addition, he said it’s not fair to companies who don’t use the loophole to their advantage.

“It doesn’t really put folks on a level playing field. If you decide to use this loophole, it would put you at an advantage to other companies that weren’t using the loophole,” Taylor said. “Every Bakken well becomes a ‘stripper’ at some point. They’ll get down to 30 barrels a day.”

David C. Thompson, a Grand Forks attorney and author with an interest in seeing closing the stripper well “loophole” closed, said the law is archaic. “It’s being used opportunistically,” Thompson said. “The law was never designed to be used where you have high-recovery techniques of fracking.”

Thompson, along with his assistant Erik A. Escarraman, released an online report at http://www.scribd.com/doc/109332442/Political-Campaign-Money-From-Big-Oil-Governor-Jack-Dalrymple-and-North-Dakota-s-Class-C-Felony-Bribery-Statute in October that was critical about possible political interests involved with stripper well properties, campaign contributions and the North Dakota regulatory process.

Land of 10,000 Js

I can’t be the only one who notices the peculiarities of the license plates all over Dickinson. I’ve noticed a pattern over the past several months during the routine of driving around town, and of course, when parking at Walmart.

There’s the sea of out-of-state plates, which has been discussed widely, but then there’s all the North Dakota plates that start most often with the letter “J.” I’ve begun to make a game of it — will the next car I see with a North Dakota license plate be a J-plate? — most of the time it is. Right away, this bothered me — I imagined deep conspiracies of trying to easily label all the newcomers. I imagined the J-cars out on I-94 spotted by Highway Patrol officers who would knowingly smirk, ‘there’s another one.’

You may be thinking I have an active imagination — guilty. I do it partly to keep myself entertained, and partly to try to figure out what in the world is going on around me, and there’s a lot to figure out here. Though I was raised in ND, I haven’t been back since high school — I’ve lived in Minnesota, land of 10,000 lakes. So I wonder what the heck is going on at the local DMV — do they dream up ways to entertain themselves and then come up with ‘I know, let’s make all the new license plates start with J!’

I mentioned the J-plate pattern to someone I know, and he played right into my spoof-conspiracy theories. We both noticed not only the Js, but the JUHs and JAHs popping up on cars everywhere around town — are we newcomers known as the JUHs? — that is just too ridiculous. My personal favorite of plates I’ve seen is JUH 777 — I think of it as the lucky license plate.

This morning, I started to muse about whether I’m complaining too much about all the things I have to get used to around here, including the J-plates. So when I get my new plates, I briefly mulled over getting personalized plates that say, JOB 777. Because that’s what I have since I moved back here.