FARGO – The prosperity of North Dakota’s oil industry and frustration over federal energy regulations highlighted a field hearing here Saturday of the U.S. House Oversight and Government Reform Committee.
The hearing was the second of two such meetings this week on domestic energy production.
Friday in Oklahoma, members of Congress heard testimony on the “unnecessary and burdensome regulations” that Oklahoma state leaders and oil industry experts face from the federal government.
A day later, North Dakota’s oil production and job creation was deemed “a blueprint” for the rest of the country, with testimony at Saturday’s hearing emphasizing the prosperous relationship between the state government and the oil and gas industry.
The hearing also shed light on the red tape that comes with extracting reserves beneath federal lands and building interstate pipelines to transport oil.
“People are fascinated with what’s going on in North Dakota; North Dakota is the envy of the nation,” said Republican Rep. Rick Berg, who hosted the House oversight committee’s visit Saturday. “Their committee wanted to come out and talk firsthand with the people who are engaged in the industry.”
Committee Chairman Darrell Issa, R-Calif., called the Bakken formation in western North Dakota the “new frontier of domestic oil production” because modern technologies – such as horizontal drilling and hydraulic fracturing –have allowed companies to extract reserves that had been inaccessible a decade ago.
“North Dakota and other new finds will allow us to, in the future, be oil self-sufficient,” Issa said. “North Dakota is where it is because of the state, not because of what Washington’s done for you.”
Across two and a half hours, North Dakota leaders and oil and gas industry experts testified about their experiences and the state’s story of successful oil development.
North Dakota Commerce Commissioner Al Anderson, state Mineral Resources Director Lynn Helms and Michael Ziesch of Job Service North Dakota discussed how the state’s oil boom has fueled job creation to such an extent that there are more jobs than people available to fill them.
“I’m not trying to say you have the easiest job in America, but it’s looking pretty good,” Issa joked.
Ziesch explained that while jobs are bountiful in North Dakota’s oil patch, officials seek to ensure that job candidates are placed in employment they’re qualified for.
“We want them to come up here and be successful,” Ziesch said.
Helms discussed some of the regulatory obstacles oil companies face when seeking drilling permits on the state level versus the federal level.
For private- or state-owned land, the North Dakota Industrial Commission usually OK’s drilling permits within three weeks, Helms said.
In comparison, federal drilling permits can sometimes take six months for approval, even though “there is absolutely no” geological difference in the land companies are drilling on or beneath, Helms said.
“The geology is consistent as you cross the boundaries of property ownership,” Helms said. “The only thing that changes is the regulatory burden.”
Executives from oil companies, like Continental Resources and Whiting Petroleum Corp., also testified before the House committee about the positive economic impact their companies have brought to North Dakota.
“The North Dakota template should and could be a model for western states,” Whiting vice president Jack Ekstrom said. “Regulation and partnership with resource developers works well here.”
Whiting Petroleum is the third-largest oil producer in the state and operates 21 drilling rigs in North Dakota and Montana.
Jack Stark, Continental Resources’ senior vice president for exploration, also sang North Dakota’s praises.
He complimented the state for its incentives during the mid-1990s that encouraged oil companies to delve into modern technologies in the Oil Patch.
“This didn’t happen overnight; 15 to 20 years of technological advancement brought us here,” Stark said. “The support like we have from North Dakota, that’s instrumental.”
Continental Resources is the largest player in the Bakken, with more than 940,000 acres under lease and 26 rigs operating in western North Dakota.
Saturday’s hearing was also an opportunity for industry experts to advocate for the Keystone XL pipeline, a project that’s tied up in political deadlock in Congress.
The proposed pipeline would transport oil from the Canadian tarsands through the central U.S. – including states like North Dakota – to oil refineries in southeast Texas.
True cited various examples of how pipelines are more cost-efficient than using hundreds of trucks to transport oil daily.
In western North Dakota, the relentless truck traffic has quickly deteriorated roadways that weren’t built for such use. That wear and tear could be reduced with more pipelines, True said.
“This is clearly a significant infrastructure gap that needs to be solved,” True said.
The oil industry leaders said they prefer clear and predictable regulations they can count on, much like they deal with in North Dakota.
“North Dakota does have a tough regimen of policies and guidelines for permitting our projects,” Hatfield said. “The one thing we do have in North Dakota that’s benefited us is the predictability of it. We know what those policies and procedures are.”
Despite all the praises of North Dakota’s oil industry, there was little discussion during the hearing of the consequences of rapid energy development.
Aside from infrastructure issues, many communities in western North Dakota also face severe housing shortages and other challenges because of the toll the oil boom has taken in recent years.
Texas Republican Rep. Blake Farenthold was the only representative to address the topic, likening North Dakota’s situation with some challenges his state has faced in tapping reserves from its own shale formation.
“We’re experiencing some real growing pains as a result of that. … How are your cities dealing with it?” he asked North Dakota leaders.
Anderson responded by highlighting recent investments from the Legislature to fund infrastructure projects in western North Dakota, as well as tax credits the state has offered for developers to build affordable housing where it’s needed.
Anderson complimented the oil companies for doing their part in helping to ease the burden of the boom.
“The industry has been outstanding,” he said.