(New throughout, adds vote results, quotes from regulatory
meeting)
By Ernest Scheyder
BISMARCK, N.D., Sept 24 (Reuters) - North Dakota regulators
on Thursday gave the energy industry 10 extra months to reduce
the amount of natural gas burned off at oil wells, acquiescing
to industry worries that construction delays have made it all
but impossible to meet existing targets.
Regulators in the No. 2 U.S. oil producing state stopped
short of approving the full two-year extension sought by
companies grappling with the steepest price downturn in years.
Environmentalists, who had wanted to stick to the original
deadline, criticized the decision.
Flaring, the wasteful burning of natural gas that occurs
when pipeline infrastructure is lacking, hurts corporate profits
as well as tax revenue.
Governor Jack Dalrymple and the two other members of the
North Dakota Industrial Commission (NDIC) voted unanimously to
change the date when companies must capture 85 percent of
natural gas produced from their wells to Nov. 1, 2016.
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The extension pushes back potential penalties for companies,
including forced reductions in oil output, and gives contractors
next summer to try and expand a crucial network of natural gas
gathering pipelines.
One environmental activist stood up at the vote's conclusion
and lambasted Dalrymple for being "too cozy with the oil
industry."
"The industry's presentation has some very real reasons why
the goal has become more difficult," said Dalrymple. "Many of
these items they've mentioned realistically could not have been
expected."
Industry officials said impediments to gas collection
included regulatory delays to construct Hess Corp (NYSE:HES) HES.N and
Oneok OKE.N pipelines, as well as technological advancements
fueling a 16 percent spike in natural gas production.
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While ultimately agreeing with oil producers, Dalrymple used
the NDIC deliberations to pressure them by insisting that the
final flaring reduction target rise to 91 percent of produced
gas by November 2020, up from a previous goal of 90 percent.
"There's a lot of states that think 90 percent isn't all
that great," said the governor, a Republican who recently
announced he will not seek reelection next year.
Indeed, Texas oil producers collect more than 99 percent of
gas from their wells.
The energy industry expressed disappointment with the 90
percent target and the length of the extension, but executives
pledged to meet the new goal.
"The goal for 85 percent by November 2016 is achievable,"
Phil Archer of Whiting Petroleum Corp WLL.N , North Dakota's
largest oil producer, told commissioners.
"UNANTICIPATED DELAYS"
The state has long tried to trim flaring. Lynn Helms, head
of the Department of Mineral Resources and a key NDIC advisor,
noted that producers collected 95 percent of produced gas when
the state's latest oil boom began in 2008.
"It's always been my goal to get back to that," he said in
an interview after the vote.
Bowing to pressure, the NDIC in June 2014 imposed four
increasingly tighter tranches for how much gas can be burned
off.
The state's oil companies had successfully met each of those
goals, collecting 80 percent of produced gas in July, the latest
month for which data are available. That went beyond current
standards to collect 77 percent.