Tappin the bakken

Tappin the Bakken1 Wednesday, Oct. 28, 2015 sidney Herald Tappin the Bakken sidney Herald Wednesday, Oct. 28, 2015 1

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By Mike Francinguessidney Herald

Richland County and the City of Sidney are working to make bud-get adjustments after declining oil prices have greatly reduced the amount of tax revenue flowing into their coffers.

The states collection of oil and gas revenue has halved in the past year as oil companies stop drilling new wells due to low prices. The state took in $59.6 million in the first quar-ter of 2014, compared with only $26.8 million in the first quarter of 2015. The state kept $14.4 million for itself, compared to 2014s $32.4 million.

As a reflection, the amount re-turned to counties has also halved, from to $27.1 million to $12.3 mil-lion. Of that, Richland County will receive $5.7 million (down from $12.8 million) and Sidney will receive $161,376 (down from $341,629) in the first fiscal quarter of 2015.

Budgets are getting tight on both entities as they deal with the impacts still being felt in the area, including crumbling infrastructure and over-burdened services.

Thats general fund money, so weve made a lot of cut backs, said Mayor Rick Norby. Unfortunately, road projects, but every department has seen the cutbacks. We have to do as we go type cuts, too, what needs to be there and what doesnt. Its the only way we can do it.

The city receives 1/10 of 1 per-cent of oil revenues, Norby said. Although the city has worked not to rely on that money, overwhelmed garbage, sewer and other services eventually forced the city to rely on the oil income, Norby said. Garbage numbers still show somewhere between 7,500 and 8,500 people in the

city, approximately a 50 percent rise from 5,000 in the 2010 census.

When we figure in things like bonding for the lagoon, we still fig-ure on our base population...in case we get half way through like this and it shuts down, Norby said.

Similarly, the county is struggling to keep up with infrastructure and roads projects, and county commis-sioners do not expect relief anytime soon.

We anticipate that very soon these revenues will be tremendously reduced, probably about 60 percent from where they are now, Commis-sioner Loren Young said. Theres a tremendous lag period between when the well is produced and the time the company sends the taxes to the state. It hasnt hit yet, and were in for some extremely reduced revenues.

The county has been able to make back at least a portion of its lost revenue by keeping mills unchanged with the dramatic increase in prop-erty values this year, enabling them to raise between $1.8 million and $2 million.

However, that still leaves a nearly

$3 million gap. The $2 million from taxes combined with a strategic reserve fund will help the county keep up with infrastructure projects its either already started or can not put off, Commissioner Shane Gorder said.

Were not spending it ridiculous-ly, Gorder said. Were spending it on things that are absolutely needed to keep up with changes in our com-munity. We might not be doing ce-ment stabilization or asphalt surface roads like we were in 2008 and 2007. Maybe gravel will come down now that oil companies arent wanting it. A lot of things will start coming back down. We cant just look at one year. It will take a while to adjust.

Norby remains optimistic that eastern Montanas role in the production side of the oil industry more than the drilling side, will help people stay through the downturn and hopefully until oil prices come back up, he said, noting rising num-bers in leases for apartments.

You have to [stay optimistic], he said. Its the only way to get through this.

county, city make adjustments dealing with less oil revenueA lot of things will start

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take a while to adjust.

Shane Gorderrichland county commissioner


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By Jessica senaMOntana PetrOleuM assOciatiOn

Rep. Tom Richmond (R-Billings), originally from Great Falls, has spent his life dedicated to the petro-leum industry. His career began at Montana Tech, where he was origi-nally pursuing a degree in mineral dressing, before realizing the job market was ripe for petroleum engi-neers. That was 1966, and petroleum engineering was the largest class at Tech.

While in college, Richmond worked in the field for Chevron monitoring bottom hole pressures during pro-duction operations, but eventually moved indoors for an office job with Getty Oil where he dealt in facility planning, hydraulic lifts and pump-ing systems.

After college, Richmond worked briefly in a refinery with the Phillips Petroleum Company, now Calumet Montana Refining. Prior to his second year with Phillips, however, he left the private sector to work for the United States Geological Survey (USGS), formerly the regu-latory agency overseeing onshore

and offshore drilling. Richmond worked for the USGS until 1982, regulating oil and gas on federal land.

By 1982, after sev-eral moves with the USGS, Tom applied for a vacancy on the Board of Oil and Gas Conservation for

senior petroleum engineer, and was hired by the board chairman. The board of Oil and Gas is the quasi-judicial state regulatory agency for oil and gas exploration and produc-tion, and is required to have at least three members on the board with oil and gas experience. Eight years after he was hired, Tom became the divi-sion administrator for the board, and served in that capacity for 24 years, retiring in February 2014.

In his capacity as division admin-istrator, Richmond was a part of much of the rulemaking drafted in the mid-1990s, including incentives for enhanced oil recovery (EOR). Richmond explains that he testified regularly at the Legislature as an in-formational witness on many issues

affecting the petroleum industry. Additionally, the board must apply statute enacted by state legislators when making decisions.

After the Legislature passed the production tax incentive, also known as the tax holiday, in 1993 to thwart the downward trend in drilling, it was up to the board to determine the qualifications for the incentive. As for its effect on activity, Richmond says there was a dramatic increase in the number of horizontal wells drilled in Montana. This firsthand experience would prove valuable later in Richmonds career, provid-ing an economic understanding of oil and gas policy.

The board also promulgates ad-ministrative rules, including those passed in August of 2011 which called for disclosure of chemicals and quantities used in frac fluid, as well as rules governing well bore integrity as an added environmental safeguard during well stimulation (fracking). Richmond played a huge role in the writing and facilitation of these rules. Their adoption made Montana one of the more strictly regulated oil and gas producing

states, with rules in place to ensure environmental safety and transpar-ency.

In addition to his service to the state of Montana as division admin-istrator for the Board of Oil and Gas, Richmond served as the president of the Groundwater Protection Council (GWPC) and was a GPWC board member for 15 years. Ending his time with the GWPC in 2014, the Council represents the states interests in the Safe Drinking Water Act, and is comprised of oil and gas regulators and drinking water administrators.

Richmond also served as the Interstate Oil and Gas Compact Commission official representative and associate official representative. The Compact was started by gover-nors of oil and gas producing states in the mid 1930s. Gov. Judy Martz appointed Richmond as the offficial representative, and he served as associate representative in several other administrations. The IOGC publishes recommended oil and gas statutes to state legislators and federal lobbyists.

Little Oil enjoys having big advocate in Montana

Tom Richmond

See RIchMOnd, Page 5

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Together the GWPC and the IOGC form States First, a state led initia-tive aimed at facilitating multi-state collaboration and innovative regula-tory solutions for oil and natural gas producing states.

This year, Richmonds lengthy resume proved to be a valuable asset during what many in the petroleum industry are calling the toughest Legislative session for oil and gas. Countless proposals were brought forth for new regulations on nearly every facet of drilling and extrac-tion, all of which, though, were defeated in committee.

One of the committees Rep. Richmond served on was the House Federal Relations, Energy, and Tele-communications (FRET) Commit-tee, which considered proposals to increase disclosure requirements for hydraulic fracturing, and to require costly closed-loop drilling systems in lieu of traditional drilling methods at well locations. Both bills, HB 243 and HB 253, died in committee.

During committee hearings, Rich-mond provided ample explanation of the states existing administra-tive rules on pits as well as on frac disclosure. Having partaken in the 2011 rulemaking on frac disclosure in a regulatory capacity with the Board of Oil and Gas, Richmond was received by his counterparts, both

Republican and Democrat, as a cred-ible and reliable source. His knowl-edge of oil and gas exploration and production, both in the private and public sectors, made him a regular go-to for fellow legislators on propos-als concerning new regulations on the industry.

What at first appeared to be one of the most difficult sessions for oil and gas turned out to be one of the more successful, in large part due to legis-lation sponsored by Rep. Richmond.

House Bill 411, in particular, helped Montanas smallest oil and gas producers much the same way the tax holiday has attracted larger operators to the Treasure State. The bill moved the trigger for a tax reduction on wells producing less

than 3 bbl of oil per day from $38/bbl to $54/bbl, based on West Texas Intermediate (WTI) prices. There-fore, if the WTI price is less than $54 dollars for a calendar quarter, the production tax drops from 6 percent to .5 percent on wells producing 3 bbl or less per day.

In Montana and North Dakota, well operators do not receive the WTI prices for crude, but a discounted price for transportation and ancil-lary costs. With WTI prices hovering over $40/bbl, operators in Montana are likely getting little more than than $30/bbl.

Oil production has provided employment opportunities paying wages 2/3 higher than the state average. The dynamic impact of

high wages in rural communities is evident on Main Streets all across the state, where gainfully employed oilfield workers buy homes, grocer-ies, vehicles, and clothing. Low prices, though, have impacted all oilfield employers and employees.

Many of Montanas stripper (mar-ginal) well owners testified before the Legislature that sustained low prices would make it impossible for their endeavors to remain economic. Most of these producers operate in north central Montana, several hours west of the Bakken along Highway 2, where many of the wells were drilled in the 30s and are still producing today. The people work-ing in these areas are also longtime residents, farmers and ranchers. These are the folks that showed up in Helena to plead for the passage of Richmonds House Bill 411.

In a session with multiple propos-als to eliminate the production tax incentive, one would have thought a bill to reduce taxes on any produc-ers would have been impossible to pass and earn the governors stamp of approval. But when push came to shove, it was the former regulator who pulled through to get it done.

As a first time legislator, Richmond sponsored eight bills. Five became law. And among Montanas Little Oil industry one will be remem-bered.

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Last month, the American Council on Historic Preser-vation recommended that a decades long lease in the Badger-Two Medicine area along U.S. Highway 2 near East Glacier Park be can-celled. The recommendation to the Departments of Agri-culture and Interior called for Departments to revoke a suspended permit to drill an exploratory gas well, and ensure that future mineral development does not occur.

The ACHP wrote, If implemented, the Solenex exploratory well along with the reasonably foresee-able full field development would be so damaging to the TCD (Traditional Cultural District) that the Blackfeet Tribes ability to practice their religious and cultural traditions in this area as a living part of their commu-nity life and development would be lost.

The recommendation fol-lows the termination of the Section 106 Process under the National Historic Preser-

vation Act at the request of the Blackfeet Tribe, which was unwilling to discuss mitigation of impacts with the leaseholder, Solenex, over the course of the last three years, when parties both in support and opposed to drilling met with BLM and Forest Service officials. The meetings of consulting parties proved ineffective, with the Tribe standing firm against any drilling what-soever in the Badger-Two Medicine.

The lease is located on Forest Service land, and the minerals are owned by the Bureau of Land Man-agement (BLM). The area, however, is said to possess cultural and religious signifi-cance to the Blackfeet Tribe; significance that would be diminished should drilling occur.

Among those at the table with Solenex over the past three years was the Mon-tana Petroleum Association. MPA, in addition to acting as a consulting party in the 106 process, filed an amicus brief in the lawsuit against the U.S. Department of In-

terior for undue delay, after decades of stalled develop-ment following multiple APD (application for permit to drill) approvals and environ-mental assessments of the lease. Countless appeals and suspensions have been the primary reasons for decades of delay.

The Solenex lease is not the only suspended oil and gas lease in the Badger-Two Medicine area. Sidney Lon-gwell, however, the 76 year old owner of Solenex, is the only one whos maintained the stamina to fight for his right to drill after all these years even, at times, from a hospital bed.

The first APD was granted in 1985 by the BLM. In 1987, the BLM issued a Finding of No Significant Impact and reapproved the lease. Then, in 1991, following a joint Decision of Record by the U.S. Forest Service and BLM approving the APD based on an Environmental Impact Statement (EIS), the BLM approved the APD. Finally, in 1993, the lease-holder received its fourth approval of the ADP, which

was signed by the Assistant Secretary of the Interior.

In 1993, development was suspended by the Secretary of the Interior to provide Congress an opportunity to consider legislation to protect natural resources within the Badger-Two Medi-cine. That suspension was extended in 1996 to provide Congress additional time to decide whether or not the Badger-Two Medicine area should be designated as a Wilderness Study Area. No such designation has since been made.

Each of the originally approved APDs precluded the inclusion of the Solenex lease area into the most recent Badger-Two Medicine Traditional Culture District (TCD). Three prior assess-ments of the boundaries for the TCD excluded the lease area in its entirety.

Following the four ap-proved APDs, about 90,000 acres of the Badger-Two Medicine was identified as having traditional cultural importance to the Blackfeet Tribe. In 2002 the Keeper of the National Register of

Historical Places determined that the TCD was eligible for listing on the National Reg-ister of Historic Places. The drilling proposal was located roughly two miles north of the district boundary at that time.

In October, 2003, the Forest Service announced that, even though the lease/drill site was somewhat distant from the boundaries of the defined TCD at that time, a study would be required to ascertain whether drilling activity (visual, audible) would affect the quali-ties that contribute to the significance of the TCD; essentially, conducting stud-ies to determine whether or not the lease/drill site was an Area of Potential Effect (APE) on the TCD. That study concluded that drilling on the site would not affect the TCD.

It was not until 2010, following the fourth ethno-graphic study of the area, that the boundary lines of the TCD were extended by more than 75,000 acres to

dealing with hallowed ground

See STUdY, Page 13


BY STeve BULLOckMOntana gOvernOr

Last month, I was joined by a bipartisan group of governors from Wyoming, Colorado, and Nevada, as well as Secretary of the Interior Sally Jewell in Denver for an important announcement regarding the Greater sage grouse.

Together, this unlikely group announced that this bird does not warrant listing under the Endangered Species Act, thus continuing state management of the bird.

This is big news for Montana. Listing of the sage grouse would have put significant restrictions on oil and gas development on private and state lands, where 70 percent of the core sage grouse habitat is located. It would have locked sportsmen off of public lands, and severely impacted grazing lands that ranchers across our state rely on.

Preventing the listing of the bird was no easy task. Just weeks after taking office, I issued an executive order establishing a task force to put together a state plan to prevent the listing of this bird. The task force was made up of representa-tives of agriculture and ranching, conservation and sportsmen, the energy development industry, and state, local and tribal governments.

Many of these folks dont agree often, but they recognized that preventing the listing of this bird, and continued state management was in their best interest, the best interest of our state, and the best

interest of this bird. So they put their differences aside, came to the table and took on this important job.

Throughout this effort, disagreements were had. Discussions often became intense, and sometimes tempers even flared. Ultimately though, we put together a plan that fit Montanas needs, and lived up to our responsibilities. Folks recognized that no one was going to get everything they wanted, but they couldnt let small differences stand in the way of the larger goal of protecting the bird and its habitat, to prevent listing.

This plan not only earned the support of these

stakeholders, it also received wide bipartisan sup-port from the Montana legislature, showing that this issue was well thought, and beyond political divides.

At the announcement last month, Secretary Jew-ell acknowledged that were it not for Montanas efforts, and the willingness of folks to put aside their differences in order to find a solution, the decision on whether or not to list the bird likely would have had a different outcome.

Work still remains to fully implement our states plans to protect the sage grouse and its habitat. Further, we need to continue to pressure the Bureau of Land Management to adjust its plans to look more like our program.

But make no mistake, last months announce-ment is a victory that all Montanans particu-larly those in the eastern portion of the state should celebrate. Perhaps more than that though, this effort is proof that when Montanans put aside their differences, and instead focus on solutions to the big challenges that face our state, there is no problem that is unsolvable.

It is my hope that these successful efforts will serve as a model for future efforts to tackle com-plex issues facing our state and her residents. At a time when conflict, rigid ideology, and gridlock seem to rule the day and the headlines, Montana has provided an example of how to get things done and how government is supposed to work.

Bullock: sage grouse decision is big news for MontanaBut make no mistake, last months

announcement is a victory that all

Montanans particularly those in

the eastern portion of the state

should celebrate.

Steve BullockMontana governor

BY JOn TeSTeRu.s. senatOr

Smart investment in Montanas infrastructure will ensure that our oil industry will continue to bring good-paying jobs to the eastern part of our state.

At the beginning of this year, I addressed the Legislature in Helena and told them that Congress and the State of Montana must make strong investments in our infrastructure to keep our economy growing.

That means investments in our roads and bridges and broadband internet that so many Montana busi-nesses rely on. But it also means investing in our oil infrastructure.

When it comes to transporting oil, safety is essential. Thats why I sup-ported building the Keystone Pipe-line, and urged it to be done to the highest safety standards and with respect to private property rights.

And thats why last year Con-gress invested nearly $150 million to improve safety and hire more inspectors to oversee our nations 2.6 million miles of pipeline.

This year, I am working to provide an additional $30 million to improve pipeline safety, because the need is there, and spills are bad for our communities, the environment and businesses.

I dont need to remind anyone about what happens when safety standards arent taken as seriously as they should be. Were still clean-

ing up from the Bridger Pipeline spill that poured 30,000 gallons of oil into the Yellowstone near Glendive.

It turns out that particular pipe-line was nearly 60-years-old.

We need to make sure that safety inspectors can get hired and on the ground as soon as possible so we can work to prevent future spills like the one in January. Because as valuable as oil is, water is more valuable.

We also need to make sure that places like Sidney have the resources they need to deal with the influx of traffic through their communities.

Back in May, I held a roundtable with Richland County officials and small business owners, and we all agreed the Legislature missed a big opportunity when it failed to pass an infrastructure bill that would benefit Bakken communities.

Meanwhile, the U.S. Senate in July

passed a six-year Highway Bill that Montana desperately needs, but the U.S. House has yet to consider it.

After nearly three months, its critical that the House passes our Highway Bill, so we can give Mon-tana communities and road crews new resources and the certainty they need to repair our states crumbling roads and bridges.

As we continue to reap the eco-nomic benefits of Bakken oil, we need to stay ahead of the curve and provide eastern Montana communi-ties the support they need to deal with the growing workforce and new faces. Including criminals.

The FBI now has a near-perma-

nent presence in Sidney to help local law enforcement deal with drug dealing and human trafficking. And on a recent tour of Montana, I made sure that the Deputy Secretary of the Department of Homeland Security is aware of the criminal challenges in eastern Montana.

The Bakken will continue to at-tract more oil field jobs, and with it new business that will benefit the entire state, particularly folks in eastern Montana. But if were going to maintain our Montana way of life, we need to support places like Sidney and Glendive and Culbertson as they face the changes that come with an economic boom.

tester: eastern Montana needs support to stay ahead to deal with challenges We also need to make sure

that places like Sidney have

the resources they need to

deal with the influx of traffic

through their communities.

Jon Testeru.s. senator


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Richland County native Jeff Zoanni has been in and out of the oilfield for the last decade, and says the key to surviving in the Bakken is adaptability.

We grew up farming, Zoanni said. In the early 90s, drilling came back to the area. I graduated in 99 and all my friends went into the oil industry.

Zoanni opted to go to auto school for a few years. When he returned, he spent some time working in the auto industry in Sidney and Bill-ings and for a painting and steam cleaning business, but before long, he found himself in the oilfield. He was able to open his own body shop in 2008.

After a short move to Billings, he said he was drawn back to the oilfield in 2012, this time as a rough-neck. But as his rig was stacked, he found himself out of a job. That is when his brother Rick had a novel idea.

When you grow up together you have dreams, Jeff said. We always wanted to do something together. I was released from my previous job and told Rick what was going on and he said, Well do you want to start something?

Nera Oilfield Services was the

result of the brothers collabora-tion. The day-to-day operations are managed by Jeff, while Rick plays an administrative role.

Although roustabouts predomi-nantly work on the production side of the industry, Jeff said, the meat and potatoes for them was drilling roustabout or solids control.

Basically they run [the drilling fluid] through a centrifuge, clean up the mud, put the good mud back in the system and take all the solids out, fly ash them and dry it out to be disposed of, he explained. The

companies recycle their drilling fluid because its cleaner and more environmentally safe.

With Jeffs colorful background, the company that started as drilling roustabouts has been weathering the slowdown rather nicely, he said. The list of services also includes sandblasting, steam cleaning and painting.

Thats why Im here, to help us diversify, he said. The slowdown has affected us, but it hasnt slowed us down. Were still out there beating the bush to try and get more work,

trying to keep people employed. Were doing pretty good, but theyre are a lot of people that arent.

They have had to go outside of the oilfield to stay busy, but have suc-ceeded in finding plenty of work, from houses and decks to beet equip-ment and barns. As a local native, Jeffs community ties have served him well.

I know a lot of people around here, so I put in some calls asking if they had any buildings that needed cleaning or painting, he said. That extended us even farther. Every year since I started back in the industry, we clean up the beet equipment, trucks, tractors, whatever needs to be cleaned. That makes the beet farmers pretty happy.

The diversification is not just good for the company, but also for the em-ployees. Many of his workers started as roustabouts, Zoanni said. But through working for him, they are learning another set of skills that they can use should they ever leave, the same way he learned these skills.

Ive learned so much by working for other people, he said. I take bits and pieces of what worked for them and didnt work for them and then tweak it in my business. Thats the thing about being around here, youve got to be able to adapt to any situation.

Zoanni brothers run oil field business in area

Mike Francingues | sidney Herald

Jeff Zoanni, above, and Rick Zoanni are the owners of Nera Oilfield Services.

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The BAckGROUndEarlier this year, legislation to

require 1,000 feet setbacks of drilling rigs from homes and surface water was put to rest in the Senate Natural Resources committee after ample testimony on both sides of the issue.

Proponents, largely members of the Northern Plains Resource Coun-cil, cited health risks, dust, noise and pollution as reasons to mandate the one-size-fits-all buffer zone. Pointing to states that have recently imposed drilling setbacks, some argued that by imposing the requirement, Montana would be following suit in public health and environmental protections with regard to drilling.

Opponents, including the Mon-tana Petroleum Association, and several of the oil and gas operators in and around Shelby and Sunburst, pointed out that setbacks of 1,000 feet would impede drilling opportu-nities in Montana. MPA pointed out that Montana is ranked 12th in oil and gas production across the coun-try, and that those cities and states which have imposed buffer zones had far more drilling activity, includ-ing operations in close proximity to densely populated cities and residen-tial areas.

Both horizontal and vertical wells

would be affected by considerably less available land for exploration, development, and expansion of multi-well pads on existing leases.

The exact language in the bill, Senate Bill 177, called for setbacks 1,000 feet from surface water and inhabitable real property, defined in Montana statute under the Radon Control Act as land to which a building is affixed. Opponents pro-vided maps of restricted areas based on the proposed law, demonstrating that because of the definition in the bill, buffer zones would start 1,000 feet from the edge of a property line, not from an occupied structure.

Horizontally drilled wells, which proponents claimed could be moved anywhere to avoid surface impacts, would become far less economic. Recoverable reserves would dimin-ish exponentially, therefore curbing the amount of revenues and royal-ties from oil and gas. Operators explained that typically wells are drilled along a subsurface fairway, and are evenly spaced. Shortening a lateral because of an adjusted place-ment of the wellhead would lessen the length of reserve that could be fracd, lessening the potentially recoverable reserves. To increase the length of the lateral to further distance the wellhead from a buffer zone boundary, would increase drill-ing costs unnecessarily.

When the issue of property rights came up, proponents argued with-out mineral rights, surface owners are without recourse when opposed to development. In response, oppo-nents addressed the issue of mineral ownership and claimed that if the bill were to pass, it would be a taking of mineral owner rights without compensation, noting that a surface use agreement and compensation is provided by the well operator. The same applies in split estate cases wherein the mineral owner and sur-face owner are not one in the same.

The bill was tabled, only to resur-face a few months later in the form of a request for rulemaking.

The BOARdThe Board of Oil and Gas Con-

servation is statutorily responsible for developing and maintaining a regulatory process that results in the greatest ultimate recovery of oil and gas and the prevention of both economic waste and physical waste of the resource. In this capacity, the board, comprised of those with in-dustry experience, as well as surface and mineral owners, functions as a quasi-judicial board with the author-ity to enact rules by which operators must abide. Recent rules passed by the board include disclosure of frac chemical additives prior to and after well stimulation activities, as well as

rules to insure the integrity of well bore casing to protect groundwater.

At a June business meeting of the Board of Oil and Gas Conservation, NPRC asked the board to commence rulemaking to impose quarter mile (1,320 feet) setbacks of drilling rigs from occupied dwellings. This is a greater distance than the proposal struck down before the Senate Natu-ral Resources committee.

NPRC claimed, again, that because other states have imposed setbacks, Montana should follow suit for the benefit of landowners.

The board set a public comment period the following month to hear from both sides. At the July meet-ing, a former inspector for the Board of Oil and Gas, as well as a recently retired member of the board for 16 years, explained neither had seen issues of contention between operators and surface owners as overwhelming to the point of imposing such restrictive regula-tion. Additionally, the former board member explained that Montana is unique compared to other oil and gas states, because anyone, anywhere, has the ability and access to protest any well, any time, for any reason. The board, under existing authority, has the power and ability to impose drilling setbacks on a case by case

Montana Petroleum association fights against buffer zone in state

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BY STeve dAIneSu.s. senatOr

Montana is a true model of an all-of-the-above energy plan. From oil, coal and natural gas to hydropower and wind, energy is creating new op-portunities for our state.

We are seeing this firsthand in Sidney and communities across eastern Montana, where our growing energy sector is creating thousands of new, good-paying jobs, injecting millions of dollars into our state and local economies, and allowing for more young Montanans to put their training and education to use here at home.

We also need to ensure that sustainable policies are in place so

that our state can remain an energy leader for years to come.

It is important that Congress adopts an all-of-the-above strategy

that strengthens American energy independence and finds ways to efficiently develop and implement alternative energy sources.

Excessive regulations and the out-right blocking of popular, bipartisan plans such as the plan to build the Keystone pipeline by the Obama Administration do not bode well for the American people and our economy.

And the Department of Interiors continued efforts to impose top-down regulations on hydraulic fracturing rather than looking to the states for solutions will only hurt Ameri-can energy production and our local economies.

It is imperative this Congress fights for common-sense policies that

strengthen our nations energy secu-rity and our livelihoods like the bipartisan Energy Policy Moderniza-tion Act, which I have cosponsored.

A recent study by the University of Montana Bureau of Business and Economic Research shows how tech-nology and innovation have already revolutionized the American energy industry. Technology has unlocked access to more of our resources than ever before, driving down cost of en-ergy for consumers to half of what it was two decades ago.

As your U.S. senator, I will con-tinue fighting for solutions that help grow Montanas economy, create jobs and keep energy prices low for hard-working Montana families.

daines: energy is creating new opportunities for MontanaWe also need to ensure that

sustainable policies are in place

so that our state can remain an

energy leader for

years to come.

Steve dainesu.s. senator

By ryan Zinkeu.s. rePresentative

Potential. Montana is full of po-tential. Our state sits on some of the richest energy deposits in the world. Eastern Montana is home to the Bak-ken which holds more than 40 billion barrels of oil. We have a third of our nations coal reserves, and we are leaders in the nation in hydro power and wind energy potential. However, that is all it is potential.

While you are reading this, highly skilled Montanans who want to be working are sitting at home be-cause the federal government has strangled Montanas oil industry and killed their jobs. These men and women would much rather be earn-ing an honest days wage to support their families.

We have some of the hardest work-ing folks in the world working in the oil and gas industry in the Bak-ken. Yet workers are facing layoffs and reduced hours due to a federal government thats beholden to fringe special interests. Rather than sit idly by as folks lose their jobs, I believe Congress should act to create an eco-nomic environment that promotes energy development and job cre-ation. We must rebuild a pro-growth agenda that unleashes the innova-tion and potential of America.

I support building the Keystone XL Pipeline and lifting the ban on exporting crude oil and natural gas. We all know the arguments for building the Keystone: 44,000 jobs, increased U.S. energy security, and putting America one step closer toward energy independence. Not to mention much-needed local revenue and stable utility costs for Eastern Montanans. The benefits to lifting the ban on exporting crude oil is lesser known, though.

The antiquated policy was put in to place during the oil shortages of the 1970s and does not reflect

the energy and economic reality of today. I believe now is the time to bring our energy policy in line with our position as a world leader in oil production. Lifting the export ban is widely supported by both labor and industry. In fact, lifting the ban will create jobs and investments, accord-ing to the International Union of Operating Engineers and the Labor-ers International Union of North America. Whats more, according to IHS, lifting the ban would increase domestic oil production by up to three million barrels of oil per day, lowering gas prices by an annual average of 8 cents per gallon.

According to the Energy Informa-tion Administration (EIA), every day every 24 hours the U.S. im-ports 9.4 million barrels of oil from foreign nations. Thirty percent of that oil comes from the Persian Gulf

and countries that do not support democracy, like Venezuela. Instead of creating jobs for people in Saudi Arabia, Venezuela and Mexico, I think Congress should support job creation in Montana, North Dakota, and Louisiana.

Unfortunately, oil is not the only resource the Obama Administration does not support. The federal govern-ment has continued its never-ending land grab, which is nothing more than a crusade to shut down Mon-tanas natural resources and energy economy.

The administrations approach on sage grouse shows the government is willing to do anything it takes to restrict development. Despite the species not warranting an endan-gered species listing, 10 million acres of public lands will be closed off to mineral development alone. That

does not include acres that will no longer be open for coal, natural gas or oil development. This agenda is already having disastrous results on Montana and the West. I fear what this means for our future.

However, I remain an adamant optimist. The problems we face will never supersede the ingenuity we possess.

Montanas energy reserves contain enough oil, gas and coal to power our economy for centuries. I, along with every other Montanan, want to grow our economy and provide a brighter future for our families. As your Congressman, I have been and will continue to fight to make sure we promote policies that unleash our potential rather than bury it under the weight of Washington special interests.

Zinke: Montana can power America, but only if Washington lets us


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basis, which opponents claimed was sufficient in mitigating landowner protests.

The Montana Petroleum Asso-ciation cited the importance of oil and gas development to Montanas economy, and said that in regulating setbacks, operators would no longer be encouraged to speak with land-owners about their operations.

The Billings gaZeTTeFollowing the meeting, proponents

and opponents alike took to writing in to local newspapers.

In one letter, Virginia Cross of Fishtail wrote that, Protections like this are not rocket science. Setbacks are a basic, proactive, common-sense policy that enjoys wide precedent in other oil and gas producing states. Setbacks keep communities safe from adverse effects of oil and gas drilling: fumes from flaring, noise from transportation, and potential leaks.

Brent Mead, a native of Sidney and the executive director of the Mon-tana Policy Institute, wrote to the Billings Gazette.

The group proposing the setback rule, Northern Plains Resource Council, is notorious for obstructing oil and gas activity in the state and using scare tactics and misinforma-tion campaigns as fundraising fod-

der for their own extreme activism. Their proposal is not a good-faith ef-fort to help my hometown of Sidney and the surrounding area. It is an attempt by activists, most residing outside of the Bakken, to shut down one of the largest and oldest engines of growth in this state, said Mead.

The Editorial Board at the Bill-ings Gazette took a stand in sup-port of setbacks, noting that both Wyoming and North Dakota have regulated buffer zones around wells. The editorial recognized the exist-ing protest ability of landowners before the BOGC, but claimed that mineral ownership trumps surface ownership, and that development may progress without the consent of a landowner.

With many variables in drilling, land and mineral ownership and spacing of residences, a setback rule may not be simple. But we believe it is worthwhile.

Mead of Sidney responded, As the Gazette noted, when it comes to siting an oil well there is a robust protest and public comment pro-cess far more robust than our neighboring states that protects landowner interests. Additionally, we have a culture in this state of negotiation.

At the August business meeting of the BOGC, a motion to commence rulemaking on setbacks was made

by board member Peggy Nerud, but it failed to earn a second. To further address the request, as well as to consider possible alternatives, board chair Linda Nelson appointed Peggy Nerud and Steve Durrett, as well as board attorney Rob Stutz to a panel to work on the issue.

Following the decision, Bonnie Martinell, a member of the North-ern Plains Resource Council from Carbon County, claimed in a letter to the Billings Gazette that, No government agency in Montana is willing to protect citizen rights, and alleged that the oil and gas industry in Montana is unregulated.

Former board administrator, Rep. Tom Richmond (R-Billings) respond-ed. There are a myriad of laws and regulations, both state and federal that affect industry operations. The principle premise cited for most every regulatory requirement is the protection of the public, the environ-ment, or other resources, wrote Richmond.

Throughout the process, both before the Legislature and in front of the board, proponents lacked spe-cific evidence of public health and environmental concerns warranting further regulation. Opponents made sure to highlight reports on water and air quality, and included infor-mation about existing monitoring programs to support the case that

development is done responsibly. The Montana Petroleum Associa-

tion highlighted the A rating on air quality in Richland County given by the American Heart and Lung Association, and described the state-wide groundwater monitoring pro-gram and coinciding public, online database of results from monitoring wells around the state, including areas of prolific oil and gas activity.

Opposite the criticism of Marti-nells letter on the boards decision not to commence rulemaking at the August meeting, Richmond com-mended the action, calling the pro-posal an inflexible, one-size solution to a perceived problem he says rarely arises.

That the board might show caution in adopting rules that may impinge on the rights of mineral owners and potentially reject sound engineering and geological analy-sis as a basis for decision-making should be seen as good sense and good public policy not as a failure of the rulemaking process.

The board will provide further guidance on the issue in December, following meetings of the recently appointed panel to discuss alterna-tives. Changes in the notice require-ments to landowners ahead of drilling are among the alternatives expected.

Zones: decision could hurt oil, gas development in MontanafROM pAGe 9


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Williston Economic Developments Williston Economic Summit & Tradeshow (WEST!) event featured speakers at the Grand Williston Ho-tel that addressed issues facing the cities and businesses of the Bakken and how to move forward in the cur-rent slowdown.

The event led off with Keynote speaker Toby Madden, an economist with Minnesota Nice Properties LLC. Madden reviewed how global economics affect oil prices and what Bakken cities should do in the mo-ment.

Oil is a very inelastic commod-ity, he began. Inelastic means a very small change in quantity can have significant change in price, but a significant change in price will not change quantity.

Madden noted that the price of West Texas Crude had fallen by 7 percent that Tuesday, but was up 8 percent from the Friday before on Monday morning.

You can tell from the last two days, that the price of oil is volatile, but it is inherently volatile, Madden said.

However, despite dips and raises in individual markets, the overall prediction for the world economy is

continued growth by 2 to 3 percent. Overall, he said, it looks like oil markets will eventually come back around.

Madden looked at the individual causes that are affecting the demand for oil. Increasing the demand are things like the expanding economy, the increasing global population and income growth in poorer countries, which all put more demand on trans-portation.

Meanwhile, technological changes in oil production have increased sup-ply, and electric based transportation has been increasing, although very slowly, lowering demand. Another concern was bringing Iranian oil back onto the market, which would increase global production by 1 to 2 million barrels per day. How-

ever, Madden predicted the factors increasing demand will far outweigh those working against it.

Madden said the slowdown has of-fered businesses, as well as state and local governments in the Bakken a chance to keep moving forward and improving themselves before the oil market rebounds.

Population doubled in the last few years, he said. Houses started be-ing built, rents were as high as they are in Manhattan. You just tried to react and survive this thing.

The resulting crisis mode, Mad-den said, resulted in a hectic free for all where companies and cities were trying to make the area as best as possible with little resources avail-able. Now is not the time to start thinking that the boom is over, he

said, but to keep investing for the next boom.

You need to think, Were still way behind in our infrastructure needs. Lets plan this out. Lets catch up and make it more orderly, he said. With the uncertainty and volatility of oil prices it gives you a chance to say, What do we think is going to happen. Then what do you do if its double that, or if its half that. You can lay out the zoning if double hap-pens, or if half happens.

Cities and governments should be investing in water and sewer, power and roads, he noted. But the same goes for private industry. They need to be investing in infrastructure like pipelines and supplies like pipe and frac sand, while costs are down, so when things pick back up theyll be ahead of the game.

I know its hard politically to get a refinery,but thats the demander, thats your customer, he said, adding an area refinery would help not only produce local jobs, but cut transportation costs.

There was a lot of people who made wealth and they are chomping at the bit saying this a chance to take out competitors. This is a chance to expand, to invest in research and development, Madden said.

[email protected]

Summit speakers address outlook for oil industryWith the uncertainty and volatility of oil prices it gives you a

chance to say, What do we think is going to happen. Then what

do you do if its double that, or if its half that. You can lay out

the zoning if double happens, or if half happens.

Toby MaddenMinnesota nice Properties


include the drilling lease area. Findings justifying the extension have been largely concealed from the public through redacted informa-tion within the study.

Last month, the Montana Petroleum Association filed comments with the ACHP ahead of their recommenda-tion, which included these remarks;

Because the original ADPs were issued on public land not prescribed as Wilderness or Wilderness Study Areas, and not included in a TCD, we contend that the APDs were issued legally and within the scope of property rights held by the govern-ment, and that any judgment to the contrary would as-sume retroactive applicabili-ty. Consultation ahead of the approval of APDs prior to 2002, when the original TCD was established, would have been unnecessary, as the lease area and development would in no way infringe upon rights of use or access to the area retained by the Blackfeet Tribe in the 1895 agreement.

Accepting arguments that the leases and/or APDs were issued illegally would confer that the exclusive rights to development are reserved not by the owner of the lands, the government, but by the Tribe. We contend, on the contrary, that rights to development were clearly relinquished by the tribe in 1895.-Montana Petroleum As-sociation public comments, September 2015.

MPA included language from the 1895 agreement, which reads;

Indians of the Blackfeet Reservation hereby convey, relinquish, and release to the United States all their right, title, and interest in and to that portion of their present reservation in the State of Montana.-Article 1, AGREE-MENT WITH THE INDI-ANS OF THE BLACKFEET INDIAN RESERVATION IN MONTANA

That upon the filing in the United States local land of-fice for the district in which the lands surrendered by article one of the foregoing agreement are situated, of the approved plat or survey authorized by this section, the lands so surrendered shall be opened to occupa-tion, location, and purchase under the provisions of the mineral-land laws only..-AGREEMENT WITH THE

INDIANS OF THE BLACK-FEET INDIAN RESERVA-TION IN MONTANA.

Under law, the lands relinquished in the Treaty were to be opened under the provisions of the mineral-land laws;

30 U.S. Code 22 - Lands open to purchase by citizens: Except as otherwise pro-vided, all valuable mineral deposits in lands belonging to the United States, both surveyed and unsurveyed, shall be free and open to exploration and purchase, and the lands in which they are found to occupation and purchase, by citizens of the United States and those who have declared their inten-tion to become such, under regulations prescribed by law, and according to the local customs or rules of miners in the several mining districts, so far as the same are applicable and not incon-sistent with the laws of the United States.

MPA claims that Federal Agencies have exercised their due diligence in facili-tating the Section 106 pro-cess through three meetings of consulting parties, in an effort to foster discussion on ways the leaseholder might mitigate impacts in the Badger-Two Medicine. Meet-ings, however, were unpro-ductive, with the Blackfeet Tribe unwilling to consider any outcome but complete avoidance, no surface oc-cupancy.

The most recent Determi-nation of Adverse Effects by the undertaking on the TCD, released by the Forest Ser-vice, sites a disturbance area between 14.18 and 22.91 acres maximum, within the 165,588 acre TCD. This represents an impact area of approxi-mately .014 percent.

Considering the entirety of the TCD, the lease area exists within the most disturbed area, argued supporters of drilling. A Forest Service report states; Modern disturbances are present in some areas. The northern periphery of the district is affected by the noise and visual intrusions of the Great Northern Railroad, Montana Highway 2, several utility lines, the Summit Campground, the Roosevelt Monument, and various private property developments all located along a travel corridor that separates the B2M TCD from Glacier National Park. There are also two electronic com-

munication sites located on Mount Baldy and Half Dome Crag peaks in the eastern portion of the TCD. A Forest Service administrative site, Badger Cabin, is located roughly in the center of the TCD and numerous Forest System trails are inter-spersed throughout the TCD.

The lease is located in the Hall Creek area of the Badger-Two Medicine, which the Forest Service described as a setting with reduced in-tegrity. The area is bordered by both Montana Highway 2 and the Great Northern Railroad.

Two pipelines have been established on the edge of the Hall Creek (lease) property, which Solenex said would be utilized should the well be successful, elimi-nating the need for further disturbance through new pipeline construction.

Relative to vast size of the TCD, MPA stated that we be-lieve the long-term impacts from development to the physical integrity of land will be negligible, compared to the other modern distur-bances and infrastructure that exist within and around the lease area, and with tech-nology which has created safe and efficient methods of mineral extraction.

Since the permits were originally approved, inno-vation and advancements in drilling technology have been significant. Drilling dis-turbances, including visual and audible impacts, are short term and temporary; only until a well is either placed into production or capped during reclamation.

Some conclusions, on which resistance from the Tribe has been based, ascer-tain that disturbance in the lease area will impact the overall feeling of the TCD, with respect to its religious importance to the Tribe, through cumulative losses indicated in the Adverse Effects report by the Forest Service.

Agencies are statutorily obligated to consider rea-sonable and practicable solutions to mitigate dam-ages and potential harms to natural resources. The Petroleum Association made clear in their comments to the ACHP that, that there is nothing reasonable or practicable about ruling against development on a legally obtained, previously assessed and approved, lease area for development on

public lands.Issues of contention

between Tribal religious grounds and development are no stranger to the courts. Development has, on count-less occasions, been upheld in court on judgments that proposed development did not prohibit access to sacred grounds, nor prohibit the ex-ercise of religious practices in areas of proposed develop-ment, or otherwise conflict with the 1978 American Indian Religious Freedom Act to protect and preserve the traditional religious rights and cultural practices of American Indians.

For example, 1988, Lyng v. Northwest Indian Cemetery Protective Association; The U.S. Forest Service attempt-ed to complete a logging road through the Six Rivers National Forest in north-western California, despite the religious use of the area by three Indian tribes. These tribes challenged the construction of the road, arguing that it violated the Free Exercise Clause of the First Amendment. The Court held that there was no con-stitutional violation because the road would not coerce the tribes into violating their religious beliefs.

While countless decisions have more recently approved development on sacred tribal grounds, the Lyng case serves as a poignant example. By ruling in favor of development, the Court avoided a situation in which tribes could guarantee the nonuse of significant portions of government land. The Court, reportedly, realized that the veto power requested by the tribes could easily require de facto beneficial ownership of some rather spacious tracts of public property, and it accordingly acted to prevent such an occurrence.

According to the Court, any other decision would result in a diminution of the Governments property rights, and the concomitant subsidy of the Indian reli-gion.

In Lyng v. Northwest Indian Cemetery Protective Association, the Supreme Court issued the following statements, which we find relevant to any determina-tion in the matter concern-ing Solenex; however much we might wish that it were otherwise, government simply could not operate if it were required to satisfy ev-

ery citizens religious needs and desires. In particular, the Court was concerned about the future of sacred sites and the consequences that would follow if it required the government to manage these lands in accor-dance with tribal religious needs and desires. Such a decision would have ef-fectively granted tribes the exclusive right to control the use of these lands. The Court added, Whatever rights the Indians may have to the use of the area, those rights do not divest the Government of its right to use what is, after all, its land.

Under the 1895 agreement, the Blackfeet retained the rights to hunting, fish-ing, and wood extraction. Solenex and supporting parties argued that none of the retained rights would be impacted by drilling on the leased area.

Outside of the courts, contention between develop-ment and tribal religious grounds has been mitigated successfully through the Sec-tion 106 process of the Na-tional Historic Preservation Act (NHPA). Cases wherein parties do not reach a com-promise or Memorandum of Agreement are extremely rare, said Katry Harris with the ACHP at a meeting of consulting parties in April.

At all three of the meet-ings of consulting parties, Solenex and parties in sup-port of development demon-strated a sincere willingness to hear from the Tribe, so as decisions about mitiga-tion could be made ahead of development, to avoid or minimize impacts.

Due to largely redacted ethnographic reports which conceal sensitive and confi-dential information within the TCD, Solenex and sup-porting parties, including the Montana Petroleum As-sociation, relied heavily on the input and direction from the Tribe to guide discussion about practicable mitigation of impacts. The Tribe simply would not budge.

NHPA regulations only mandate discussions with affected tribes and do not force agencies to adopt a tribes position, however, in this unique case, the ACHP has done just that, by recom-mending no surface occu-pancy, no future mineral development, and the cancel-lation of the legally granted lease rights.

Study: Montana Petroleum association files comment with acHPfROM pAGe 6

See decISIOn, Page 14


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Ahead of the decision, MPA wrote that;

We believe that an agency decision that adopts the Tribes position to prohibit drilling in the TCD, based on cumulative losses or impacts on the religious significance within the TCD would confer precedence of the religious beliefs of the Tribe over the Governments legal rights to develop-ment of public lands.

Furthermore, differing world views have added to the complexities of the Section 106 meetings; specifically western science and tribal religious beliefs and starkly contrasting opin-ions of the worlds creation. To adopt the Tribes stance of no surface occupancy based on impacts to the religious aspects of the Badger-Two Medicine TCD, violates the First Amendments Establishment Clause, which prohibits government actions that unduly favor one religion over another. Again, development of the Hall Creek lease would not prohibit the exercise of tribal religious or cul-tural practices, would not prohibit ac-cess to sacred grounds, or otherwise infringe on the Blackfeets freedom to worship.

Finally, we contend that any deci-sion which dictates avoidance or prohibition of development on the Hall Creek lease infringes on the lease rights legally granted in 1982, and would directly violate surface

use rights retained by Solenex under 43 CFR 3101.1-2, specifically related to orders requiring that operations take place off of the leasehold, as requested by the Blackfeet Tribe.-Montana Petroleum Association public comments, September 2015.

Regulatory decisions prohibiting leaseholders from exercising their surface use rights sets a dangerous precedent for the future of develop-ment on public lands, wherein agen-cies cater entirely to the position of one affected party, the least of which (the undertaking) holds the legal rights to development, and bears the full costs of said development. If Tribes can influence decisions of development on Government owned land, and Traditional Cultural Dis-tricts can be expanded time and time again, without making public find-ings for such determinations, what consistency exists in the interpreta-tion of the law governing land use, and/or what is to prevent Tribes from seeking to prohibit development on large swaths of land elsewhere?

If legally binding contracts (leases) can be impinged through either retroactive applicability of agency decisions, or assessments bearing redacted (concealed) findings on ad-verse effects, what certainty is there in the leasing process?

The future of multiple use lands rests on hallowed ground.

decision: leasing process in questionfROM pAGe 13


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That which comes up, must go down; from upstream at the wellhead, to refineries downstream. But what happens in between?

The petroleum industrys mid-stream sector is often omitted from conversations about activity. Howev-er, pipelines serve as lifelines in the volatile energy sector, transporting not only crude oil, but natural gas.

In spite of their controversial nature, pipelines are the safest and most prolific mode of petroleum transportation, with more than 2.6 million miles across the country, compared to just 240,000 miles of railroad.

BiggesT in The BakkenHere in the Bakken, ONEOK Part-

ners owns six processing facilities with two more under construction, more than 6,500 miles of pipeline, and more than 3 million acres of pro-duction dedicated to their systems. Its the largest independent operator of natural gas gathering and process-ing facilities in the Williston Basin. Between 2006 and 2014, ONEOK Partners completed $8 billion of capital-growth projects and acquisi-tions companywide, and has invest-ments of approximately $3 billion in

additional projects at varying stages of production across the Williston Basin area.

Amidst news of declining activ-ity as the result of lower oil prices, ONEOKs plans for expansion in Sidney, Montana, offer a positive reprieve.

Were still in growth mode here, says Craig Forsander, vice president of ONEOK Rockies Midstream.

ONEOK Rockies Midstream, a subsidiary, is part of the natural gas gathering and processing leg of the tripod comprising ONEOK Partners. Having outgrown leased facilities for

administrative offices and fabrica-tion, the company is currently build-ing a new regional headquarters office in Sidney, where Forsander says ONEOK Partners has a large presence.

Sidney was the right location for us for several reasons.

In 2014, ONEOK Partners employed 86 people in Montana, with a payroll totaling more than $10 million dollars in wages. Last year, the companys property tax payments exceeded $6.5 million in Montana alone; $2 million more than across the border in North Dakota.

While oil prices reached new lows this past year, natural gas prices have also stagnated due to a production surplus, sliding to three-year lows last week under $2.50 MMbtu (million British Thermal Unit).

fLARInG fUeLS deMAnd

Increased drilling during the days of $100 barrel (bbl) oil spurred demand for natural gas pipelines to stave off the influx of flared gas at the wellhead. Flaring (burning of natural gas) occurs at the oil wells when there is no place for natural gas

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Whether your operating application is transportation, construction or stationary,


to go. ONEOK facilitates the capture and transport of otherwise flared gas at the well head, to compression stations and processing plants where it can be fractionated (separated) into usable commodities and/or trans-ported for sale.

In August, ONEOK Partners was on track to connect 700 wells, and they forecast connecting another 600 next year, following more than 2,000 well connections since 2013. Additionally, a large inventory of wells which have been drilled, but not yet completed (fracture stimulated) promise a future demand for pipeline and pro-cessing capacity down the road.

Keeping up with the demand is just one of the challenges midstream companies face, however. Forsander says working with landowners to secure rights of way for pipelines can also be a challenge. During the past few years, ONEOK has built between 700 and 800 miles of pipeline per year.

Regulated targets to reduce flaring in the Williston Basin have also dra-matically impacted companies like ONEOK Partners, which is currently connected to the majority of oil wells flaring natural gas.

Richard Dick Vande Bossche, director of project development for ONEOK Rockies Midstream in Sidney, said new flaring regulations have been the single biggest needle mover in communication between the midstream and upstream sectors, wherein production companies are negotiating with pipeline and pro-cessing plants ahead of drilling.

Vande Bossche says new in-roads have been made for companies like ONEOK Partners to open discussions with well operators about production goals, volumes and schedules. This information is pertinent, as plan-ning for new facility construction is a lengthy and arduous process. ONEOK Partners explained that compressor stations take a year to construct, and new gas plants take at least two years of planning and con-struction, taking into account land acquisition, permitting and North Dakota weather.

BeYOnd pIpeLIneSIn Sidney, ONEOK Partners owns

the Riverview Rail Terminal, which was completely rebuilt in 2010, when additional siding was added and loading capacity was expanded from 10 to 30 rail cars, each with a capac-ity of 30,000 gallons. At the terminal, natural gas liquids (NGLs) and pu-rity products (ready for market) such as butane, iso-butane and propane are either loaded onto rail cars or shipped through a larger pipeline. ONEOK Partners natural gas pro-cessing plants supply the Riverview Rail Terminal with NGLs through four-inch pipelines.

From the Sidney rail terminal, purity products are transported by rail to commercial, residential and

manufacturing buyers. All other NGLs connect to the Bakken NGL Pipeline, which starts at the rail terminal and travels South through Montana into Colorado before head-ing east to ONEOK Partners exten-sive NGL fractionation and storage facilities. By the middle of next year, the pipeline, a 12-inch steel pipe, will transport 160,000 bbl per day (6.7 million gallons), following a $100 million dollar investment by ONEOK Partners for the construction of additional pump stations along the pipeline.

The rail facility operates 24 hours a day and employs several area locals like Lead Operator Randy Larson from Sidney. Larson works 10-hour shifts, eight days on and eight days off. Unlike many oilfield related jobs, ONEOK Partners employment is stable and turnover as a result of pricing downturns are rare within the companys facilities, all of which are stationary.

Nothing of ours, other than our trucks, has wheels, said Brian Lore, Director of Plant Operations on ONEOK Rockies Midstream, speak-ing to the long-term commitment of the company.

GRASSLAndS GASThe Grasslands processing facil-

ity was built in the seventies, and while its smaller than most of ONEOK Partners existing plants at 90 MMcf/d, its the oldest and most multifaceted. Taking in otherwise flared gas from Roosevelt, Richland and Sheridan County oil wells in Montana, the Grasslands facility

handles multiphase fractionation, separating out purity products much like a whiskey still, explained Vande Bossche.

Through varying pressure and temperature chambers in the tall cylindrical stacks at the plant, prod-ucts such as propane and butane are produced, and then batch shipped via pipeline to the Riverview Rail Terminal, or transported by truck. Refrigeration is used at all of the plants to liquefy NGLs for transport through pipelines.

Another unique component of the Grasslands facility is the amine treatment, which safely separates, isolates and disposes of hydrogen sulfide (H2S) through a disposal well at the plant.

In decades prior, the Grasslands plant also processed elemental sulfur for sale to pharmaceutical providers.

The plant has operated just over 2,200 days since its last Occupational Safety and Health Administration (OSHA) recordable lost-time incident.

expAndInG fOR The LOnG hAULONEOK Partners has built five new

natural gas processing plants since 2011. Just this year, ONEOK Partners completed Garden Creek III, located near Garden Creek plants I and II in McKenzie County, ND. Each has a daily capacity of 100 MMcf/d, the same as ONEOKs Stateline I and II plants constructed in 2012 and 2013, respectively. Capacity at these plants will increase to 120 MMcf/d later this year following the construction of ad-ditional natural gas compression.

Lonesome Creek, anticipated to

start operations at the end of the year, will be the largest of ONEOK Partners Williston Basin processing plants, with a daily capacity of 200 MMcf/d, increasing the companys processing capacity to 900 MMcf/d in the Bakken. Work also is ongoing on the Bear Creek plant, an 80-MMCf/d natural gas processing facility in Dunn County that is expected to be complete in the third quarter 2016.

Expansions are predicted to make a sizable dent in the amount of flared gas in Montana and in North Dakota.

Nearly $1.3 billion dollars have been committed in the Williston Ba-sin between now and the end of 2016 in what ONEOK plans to be a long-term investment.

With nearly all of the latest plants near completion, ONEOK Partners also is addressing the leaky roof of the overcrowded modular office building in Sidney with construction of their new regional headquarters on Lincoln Avenue.

I think we built in the right order, laughed Lore. Plants first; office second.

The new office will bring employ-ment opportunities to Sidney, along with new tax revenue.

Beyond the economic benefit of wages and tax revenue, ONEOK Part-ners is deeply committed to giving back to the community and engaging the public. More than $1 million dol-lars was contributed to community investments last year alone.

Rigs may come and go. But one thing is for certain ONEOK Part-ners is in it for the long haul.

OneOk: company has built between 700-800 miles of pipeline in past few yearsfROM pAGe 15

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Masters graduate studies results of fracking brine water spillBy Jenny laveyMsu neWs service

BOZEMAN Alexa Azure has always been interested in water.

An enrolled member of the Stand-ing Rock Sioux Tribe in North Dako-ta, she remembers one spring when the water tasted gritty and another time when Standing Rock completely ran out of water. She doesnt drink the water from her home faucet. Instead, she uses her own reverse osmosis water filter system.

My whole life Ive been interested in water, Azure said. Its a basic resource thats essential for all life on the planet.

Azures interest in water, as well as her experience teaching pre-engi-neering classes at a tribal college in an area that she says is sensitive to water issues due to its proximity to the Bakken oilfields, prompted her to consider an educational background in environmental science. That edu-cational background would help her be a better teacher for her students who are interested in environmental issues, she thought.

I wanted to deepen my under-standing of the environmental side of things, Azure said. I have the chemical and engineering back-ground but not the environmental background and I could tell thats where the interest of most of my students was, because of the indus-try in our region and the effect it has on local communities.

The catch, Azure said, was that she didnt want to have to leave her job in order to pursue an advanced degree.

Thats where Montana State Uni-versity came in. MSU and its online masters program in land resources and environmental sciences within the College of Agriculture helped Azure achieve her educational goals without having to drastically change her life or quit her full-time teaching job.

The program was great, and I would recommend it anyone, Azure said. The instructors were amaz-ing and I learned a lot not just in the technical field, but professionally as well.

The online LRES masters pro-gram started in 2012 with 11 stu-dents. Now in its fourth year, the program enrolls 58 students with 18 instructors.

Azure also enjoyed great success as a student in the MSU program. During her time in the program, she earned a prestigious scholar-ship, the American Indian College Fund and Alfred P. Sloan Foundation Leadership Fellowship Program, a fellowship created to increase and retain the number of diverse and under-represented faculty at the nations tribal colleges teaching in science, math and engineering. In 2013, Azure was one of only two native students in the country who earned the prestigious scholarship,

according to the American Indian College Fund.

Azure once attended United Tribes Technical College as an undergradu-ate student and completed a bach-elors degree in chemical engineer-ing from The University of North Dakota in 2012. She has since been teaching pre-engineering classes at the tribal college, located just three hours from Williston, N.D., where the Williston Basin and Bakken formation is.

On Jan. 6, the largest brine spill that has occurred in North Dakota happened in Williston. Three million gallons of salty brine water was accidentally released into the sur-rounding environment, local surface and groundwater. According to the Environmental Protection Agency, the contaminated water reached the Missouri River.

Brine water, a byproduct of oil and gas drilling, is a particular risk where hydraulic fracking is prac-ticed because the brine can include toxic levels of salt, heavy metals and radioactive materials that can raise salinity levels of local waterways that can affect plants, invertebrate and amphibian life, according to the EPA.

Azure decided to use the environ-

mental disaster in her own backyard as the subject of her professional pa-per required of the masters degree, so she performed an environmental risk assessment of the brine spill to measure the potential effect on the surrounding environment. She evaluated water samples from the nearby Blacktail Creek and the Little Muddy River and also used the riv-ers fathead minnow, a key food-web species in North Dakota, to see if there were any harmful effects from the brine spill on local fish habitat. She found some of her samples that were exposed to the brine water exceeded risk thresholds set by the North Dakota State Department of Health and the EPA.

Robert Peterson, director of the online LRES program and faculty in the department, who also served as Azures professional paper instruc-tor, said the spill was unfortunate, but it was also an asset to the scien-tific training the program encour-ages.

What was really awesome is that she used the process of science and research to respond to a very timely and regional environmental prob-lem, Peterson said. Her data can potentially be used in predicating risk from future spills of a similar

size, so the applicability of her study was directly tied our curriculum and her field.

Peterson said his online students can bring a different viewpoint to class discussions, as most are cur-rently working in a professional field, many from nonprofit

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Tappin the bakken