New ND Gas Policy Designed To Spur More Midstream Development
A new North Dakota state policy, designed to accelerate the development of pipelines and gas processing plants to handle natural gas processing, has just been implemented by the ND Industrial Commission.
The firm commitment policy is designed to encourage midstream companies to invest in infrastructure ahead of field development.
Lynn Helms, director of the ND Dept. of Mineral Resources, said instead of waiting until wells are drilled and producing, the new order will put midstream projects by as much as two years.
He estimated that an $18 billion investment over the next 20 years is needed to meet the state’s gas capture goals and reduce flaring.
Currently, most producers are trying to connect their wells to a gas gathering system, but much of the natural gas ends up being flared because there is not enough capacity, either in pipelines or at gas processing plants.
“The commission is concerned that firm capacity contracts could crowd out small producers, result in new capacity being built to no more than the firm capacity contract volumes, and create inequities with current and future contracts,” the regulatory agency said.
The new firm level of service policy adopted by the commission guarantees space on a midstream pipeline.
The order clarifies that a firm commitment does not constitute “discrimination” against other producers that use the same pipeline but have different contracts that allow companies that purchase their gas to curtail shipments if a line becomes full.