American Oil and Gas Reporter - August 2015 - 138

"creates an even stronger, better North
Dakota," Ness holds.

Tribal Matters
The consequences of reduced OET
revenue continued to reverberate into July,
when the chairman of the Three Affiliated
Tribes expressed concern in press accounts
about lower anticipated revenue and a
2008 agreement by which the state collects
oil taxes from Fort Berthold and splits
the revenue with the tribe.
"It's possible that we may not figure
out how best to reach an agreement,"
Mark Fox, TAT chairman, was quoted
in published reports.
The Tribal Council had objected to
lowering the OET during the legislative
session, but did not comment on the compromise bill that was approved at the
end of the session.
Media accounts also indicate producers
on the Fort Berthold Reservation have
expressed concern about the prospect of
seeing the tribe withdraw from the tax
agreement. If the tribe establishes its own
tax collection apparatus and rates, operators
will face separate rates from two tax collection agencies. According to press accounts, that prospect has prompted some
of the eight companies operating on the
reservation to consider departing Fort
Berthold altogether, and the issue has
prompted discussions between the Tribal
and State Relations Interim Committee
and tribal representatives.
Separately, NDPC reports, the formation of a new, local tribal regulatory enforcement authority in the Fort Berthold
town of Mandaree, N.D., is raising new
concerns. "It is too early to speculate on
how this will impact operations on the
reservation," Pearce observes. "When the
industry is put in a position in which it
must deal with multiple jurisdictions regulating and enforcing different sets of
rules, the results are seldom positive."
The West Segment Regulatory Commission was certified by the tribe in
March and by late-June, had begun registering truck drivers and enforcing road
restrictions.
"This continued piling on of regulatory
processes and fees, without making significant progress, is very troubling," Ness
suggests. "If there are operator violations,
we should work together to identify
where and when, so we can do something.
But this commission should not be collecting personal information from individual drivers."
By Rail Or Pipeline
In the wake of a series of train accidents, state and local governments in the
eastern United States and Canada are

considering new restrictions and disclosures from railroads shipping crude oil
by rail (AOGR, November 2014, pg. 36).
Although shipments of crude by rail
have increased, train safety also has seen
a significant improvement, according to
the Association of American Railroads.
In 2008, railroad shipments of crude oil
totaled 9,500 carloads. By 2014, crude
shipments increased to 493,146 carloads.
Yet, even amid growing crude shipments
and several high-profile accidents in recent
years, the overall railroad industry safety
record continues to improve, AAR maintains. During the past 15 years, it reports
rail accidents have fallen 44 percent, employee injuries are down 47 percent, and
the grade crossing collision rate has decreased 38 percent.
In May, new federal regulations were
issued that aim to improve rail safety and
provide greater protection from accidents,
AAR notes. However, the regulatory package includes requirements that trains be
equipped with electronically controlled
pneumatic brakes that AAR says provide
little additional protection while increasing
costs and reducing capacity.
Since rail transports the majority of
Bakken crude, North Dakota producers
support many of the regulatory and operational changes, NDPC indicates. Even
so, pipelines remain the preferred means
of transporting oil, Ness says. "Shipping
crude by rail is still a huge issue for us,"
observes Ness. "We will continue to face
the risk of rail accidents until we can get
more pipelines in the ground."
Nevertheless, media accounts note, financing, permitting and laying new
pipelines remain a challenge, and pipeline
proposals face opposition from landowners
and have attracted protests from anti-development groups. Moreover, a North
Dakota Public Service Commission hearing in Belfield in July saw members of
the Laborers' International Union voice
concerns about a proposal to build a 15mile crude line in Billings and Stark
counties in parallel to an existing line.
Further upstream on crude oil logistics
issues, NDPC opposed legislation in the
2015 session that would have created
equipment and leak detection systems
and imposed new bonding requirements
for oil and produced water gathering systems. The bill, SB 2344, failed in the
House on a 19-72 vote.
"We still need to get pipes in the
ground, and requiring unnecessary equipment and excessive expenses does not
help," Ness emphasizes. "We continue to
see regulatory delays that could constrain
production. We will push against that."
Ness reports that NDPC is anticipating
the results of a new study and expects it

138 THE AMERICAN OIL & GAS REPORTER

to demonstrate the safe, efficient and reliable operation of liquids pipelines. Conducted by the Energy & Environmental
Research Center, the study is examining
operational records for major pipelines
with an emphasis on spill causes and
prevention. The EERC report is scheduled
for release in November, states Ness.
Meanwhile, in response to concerns
about crude oil volatility, North Dakota
regulators have adopted crude conditioning
rules that are intended to reduce rail shipment hazards by reducing vapor pressure
of oil before transport (AOGR, January
2015, pg. 225). "I am encouraged by the
level of compliance from our members,"
Pearce assesses. "We are seeing companies
invest in equipment and testing to ensure
the oil meets the rules."

Other Concerns
Among other issues confronting NDPC
in 2015 has been a report on worker
safety and ongoing efforts to allow disposal
of certain radioactive materials in North
Dakota landfills.
NDPC is challenging a report by the
Center for Investigative Reporting that
claims deteriorating safety conditions at
oil and gas sites across the Bakken have
resulted in as many as 70 deaths during
the past 10 years.
Although some media have trumpeted
the findings, NDPC describes the analysis
as biased and misleading. Other media
accounts note the fatality rate for oil and
gas workers was lower than other industries and worker injury claims declined
in North Dakota for the first half of the
state's fiscal year.
Moreover, published reports cite a report by the federal Bureau of Labor Statistics that shows oil and gas industry
workplace fatalities occur at a rate of
12.3 deaths for every 100,000 workers,
which compares favorably with other
sectors such as the agriculture and timber
industries, which show a fatality rate of
22.2, and transportation and warehousing,
in which the rate is 13.1.
NDPC also is following the progress
of new regulations being considered by
the North Dakota Department of Health
that will allow operators to dispose of
technologically enhanced naturally occurring radioactive material (TENORM)
waste at certain landfills under strictly
controlled conditions for transportation,
burial and ongoing monitoring.
The department notes that current North
Dakota law forbids such disposal, which
forces companies with TENORM to ship
such waste out of the state. DOH says the
rule change remains under discussion and
has been the subject of a series of public
hearings across the state this year.
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American Oil and Gas Reporter - August 2015

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