I’m pissed off about so many things this week I don’t know where to start. That’s what I get for taking a few weeks off to play. Things pile up. I’m about to go on a rant that will surely get me another admonishment from my friend Wayne Tanous: “Jim, lighten up. It’s spring.” Okay. So I’m going to get all this off my chest. And then lighten up and plant potatoes.
First, I’m pissed off at Conoco-Phillips, WPX Energy, Whiting Petroleum, Continental Resources, and the North Dakota Petroleum Council. They’re the ones whining about the discussion of restricting their ability to flare natural gas instead of capturing it. Most North Dakota daily papers reported on it this week. Oil companies are threatening to pull out of North Dakota and take their drilling rigs elsewhere if we try to regulate them. Cripes sake, western North Dakota is lit up like a centenarian’s birthday cake—from space it looks like New York City. Everyone in North Dakota knows we need to stop flaring a third of all the natural gas we’re taking out of the ground. Everyone except those who are putting the match to the flare spouts—the oil companies.
According to a story in yesterday’s Forum chain of newspapers, “Industry officials resisted the idea of curtailing production, cautioning that it could discourage oil and gas development and result in less tax revenue for North Dakota, which has collected billions from the industry on its way to becoming the No. 2 oil-producing state behind Texas . . . Imposing broad limits on drilling permits and production as a means to curb flaring is unnecessary and could force oil companies and third-party investors to think twice about doing business in North Dakota’s Bakken and Three Forks oil formations.” Here are some examples of the spouting off at the Industrial Commission hearing this week on implementing new rules to try to get a handle on flaring:
- Continental Resources: “The state must give individual companies flexibility to meet flaring targets. Exemptions should be given for production restrictions on a case-by-case basis . . . when midstream companies are unable to meet system gas capture plan capacity or if landowners or federal regulations hinder infrastructure buildout.” (Translation: “It’s not our fault we’re flaring. Those darned laws that prevent us from running a pipeline through those uncooperative farmers’ back yards are to blame.”)
- Conoco-Phillips: “It may cause an adjustment to our oil and gas development strategy in the Bakken.” (Translation A: We’d have to slow down a bit and get some pipelines built to haul away our gas,” or Translation B: “We’re out of here.” You pick.)
- Whiting Petroleum: “Curtailments are not the answer. That cuts into our cash flow and the economics of each well we drill. That could prompt companies to decide to invest elsewhere.” (Translation: our enormous profits are way more important than your stupid clean air.)
- WPX Energy: “Restrictions on production could be counterproductive.” (Translation: WTF does that even MEAN?)
Well, here’s my response: Don’t let the door hit you in the ass on the way out of the state, boys. Just pick up your toys and go home.
Oh, but wait, there’s a little problem here. All those companies have invested substantial amounts of money in mineral leases. If they pack up and go home, they’ve just wasted their money. A lot of their money.
- Conoco-Phillips has more than 600,000 acres under lease. Let’s say they paid an average of a thousand dollars an acre for those leases. That would not be out of line today. In fact, it is probably low. But let’s just say it was a thousand. That would mean they’ve invested about $600 million in those leases. Huh. Not likely to go home without developing them.
- Whiting has almost 700,000 acres. $700 million.
- WPX is just a little guy, doing most of its drilling on the 90,000 leased acres on the Fort Berthold Reservation. Knowing what the white guys have done to the Indians over the years, they may have paid less for their leases, but at a thousand an acre, that’s $90 million.
- And then there’s the big guy, Harold Hamm’s Continental. He’s the biggest leaseholder in the state, with at least a million acres. At least a billion-dollar investment.
So, okay, if we restrict their ability to flare their gas, they’re all threatening to go home. And leave a couple of billion dollars worth of leases laying on their empty office desks? Yeah, right.
I suppose they could try to sell those leases to some companies who are not complaining about the new flaring regulations, but most of them probably have all they can handle right now, and those leases are getting closer and closer to their five-year expiration date, so trying to dump a couple million acres of leases on the market right now doesn’t seem like a good business decision either.
So, y’know what? They’re bluffing. They aren’t going anywhere. They’re just, as one of my Facebook friends said, trying to bully the state into letting them keep on wasting gas and polluting our air. Well, boys, the jig is up. You’re busted. If we decide (that’s a mighty big IF) to try to keep our air clean and dark, you are going to just have to live with that.
Of course, we all know why you were at that hearing Monday. Not to protest. But to remind Jack Dalrynmple, the chairman of the North Dakota Industrial Commission, whose staff routinely grants you exemptions from our flaring regulations now, that you were big contributors to his re-election campaign a couple years ago. That you and your oil company buddies pumped almost $450,000 into the Dalrymple campaign to keep him in office, so his staff can keep granting you exemptions from our flaring regulations—and to keep him from imposing new regulations.
Well, you’re probably gonna get your way. Any new flaring regulations are going to include generous new exemption provisions, and you’re gonna get to keep on flaring a third of all the gas you’re taking out of the ground. It was all a big show for the media. Nothing is going to change. Unless Jack Dalrymple and Doug Goehring, the new ruling majority on the Industrial Commission, grow a pair of balls. Not likely.
FIGHTING THE EPA?
Here’s something that really pissed me off last week, and it’s been stewing in me for a week. I picked up a copy of The Dickinson Press and the banner headline all across the front page read “Dalrymple: ND to use ‘every tool available’ to fight EPA.”
WTF? Fight EPA? Hey, do you remember what the acronym EPA stands for? It’s the Environmental Protection Agency. And you’re going to use the resources of the state, my tax dollars, to fight AGAINST environmental protection? Excuse me, but I think I’m FOR environmental protection. Me and about 670,000 other North Dakotans, And 300 million Americans. And most of the people in the civilized world. But not Jack Dalrymple. And not those unfortunate people who happen to work for him.
Take Dave Glatt, for example. Dave is the head of the Environmental Health Division of our State Health Department. He’s North Dakota’s chief environmental protector. But the story I read about Dalrymple and the EPA said Glatt, our chief environmental regulator, had convened a “summit” to bring together other state health department officials and the energy industry—read Basin Electric—to talk about fighting FOR the right to burn coal, which fouls our air, and fight AGAINST the EPA, which wants to keep our air clean.
At issue is the new set of standards for greenhouse gas pollution from coal fired energy plants. Dave Glatt—the man in charge of keeping our air clean—apparently is opposed to standards that might keep our air clean. Good God Gertie. People who know Dave Glatt—I’m not among them—say he’s a good guy. He just happens to work for a bad guy. I do know the bad guy. Name’s Dalrymple.
And this Dalrymple fellow has got the head of his environmental health division organizing summit conferences to fight against steps being taken to keep our air clean. WTF is the matter with that picture?
I was around in the 1970’s. We had a governor who wasn’t afraid to tell the coal industry they had to clean up their act. They did. But now we know a whole lot more about what is happening to our planet. And we need new regulations. That 1970’s governor didn’t have his health department trying to figure out how to do an end run around federal regulations. Wish we had a governor like him around these days.
COLLECTING ENORMOUS FINES
Then I got home from a few days in the Bad Lands last week and saw the front page story in The Bismarck Tribune about a company from Wyoming that could be fined more than $1 million by the state of North Dakota (that was the figure used in the great big headline on the front page) for dumping saltwater from an oil well on a road in Williams County. Yeah, right.
I remember the headline from last summer, too, that the Industrial Commission levied a $1.5 million fine against a company called Halek Operating, another salt water disposal violator. So, seeing there’s another big fine about to be levied, I thought I’d check and see how collection of that other one was going. A spokesman for the Attorney General told me almost breathlessly in her excitement that, with only half a year gone by, they had already cashed and deposited two bonds posted by the company which had illegally dumped hundreds of thousands of a gallons of saltwater down a well south of Dickinson. Total take: $40,000. Wow, good start, eh? Only $1,460,000 to go. Let’s see, at the rate of $40,000 every six months . . . except there aren’t any more bonds. They have to get the rest in cash. Good luck with that.
I don’t have the paper in front of me, but I remember that big banner headline saying the Industrial Commission had fined Halek $1.5 million. Well, turns out the company had filed bankruptcy, didn’t have $1.5 million, and had no intention of paying it. Worse, the members of the Industrial Commission knew that, and went ahead and levied the fine anyway, because they knew the big headlines were going to be great for them. No mention that the state never had any intention of collecting that money—they were just collecting a big headline.
So, who wants to bet this headline—“Penalty may top $1M”—will turn out the same way?
This crime by a fellow named Leo Slemin has been charged out in Williams County District Court in Williston. Slemin is charged with a Class C felony, violating the rules and regulations of the North Dakota Industrial Commission under section 38-08-16 of the North Dakota Century Code, specifically opening up the valves on the bottom of his Black Hills Trucking Company water tanker truck and dumping his poison water all over a road in southwest Williams County. A preliminary hearing has been scheduled for June 3 at 11:30 a.m. at the Williston Court House. And here’s something else that pisses me off more than a little bit: he has applied for and will be granted a public defender. So instead of his company paying for his lawyer, you and I, the taxpayers of North Dakota, will pay for his lawyer. Makes his bosses at Black Hills Trucking look a little sleazy. They are quickly putting as much distance between him and their company as possible. According to a story in the Williston Herald, Dave Glatt, referenced above, told the Associated Press that the company has been operating here since 2008 without a license. The Attorney General has instigated civil charges against them, and operating without a license is subject to a penalty of a thousand dollars a day. That could add up to somewhere around $2 million, not just one million. I wonder if they’ll apply for a public defender too? More about that in a minute.
Another interesting sidelight is that, unlike most cases of a bad guy being caught in the act of committing a crime, this case is being prosecuted by the North Dakota Attorney General, not the County State’s Attorney. Generally, State’s Attorneys are responsible for prosecuting crimes in their county. That was the case in an earlier instance, when Mountrail County (next door to Williams county) State’s Attorney Wade Enget won a conviction on a guy who did the same thing. Just a couple weeks ago. Fined the dude $3,000 and put him on probation for a year. No big headlines—just a local sheriff and state’s attorney doing their jobs.
In this case, I suppose we can excuse Attorney general Wayne Stenehjem for jumping in and taking charge of this case. I mean, it’s an election year, and the state has been under fire for being a bit too lax with the oil industry, and this seemed like an open invitation to make a big deal out of what seems to have become routine in the oil patch—leaky vales on water trucks (Honest, your honor, I took the truck in to get those darned leaky vales fixed right away, as soon as your Oil and Gas Division guy told me there was a problem). Sock it to ‘em. A headline with the number $1,000,000 in it is just too good to pass up.
But I’m not buying this bullshit about using the big headlines to set an example for the rest of the industry to “toe the line.” Because, like in the Halek case, I’m guessing nobody is going to pay a million-dollar-plus fine for violating an Industrial Commission rule (the same charge was brought in both cases). Although there is a difference between Halek Operating and Black Hills Trucking.
Unlike the fly-by-night Halek company, Black Hills trucking is a wholly-owned subsidiary of a respected Wyoming company named True Oil. True Oil, and its founder, Dave True, who died in 1994, are a big deal in Wyoming. Dave True was Wyoming’s most famous wildcatter who built an oil and gas empire from a one-rig operation to a business of more than ten companies operating in about half of all the states in the country (shades of Harold Hamm—but way before Harold came on the scene). He was one of the original inductees into the Wyoming Business Hall of Fame when it was founded last year. I met him a couple of times through his involvement in the Old West Trail Foundation. He actually reminded me a lot of Harold Schafer, and he and Schafer were great friends, and the Trues were regular visitors to Medora. The company is now managed by his sons and grandsons, and the Black Hills Trucking Company website lists Dave True, son of the founder, as president of the trucking company.
Integrity seemed to be a word associated with True Oil, so it is a bit surprising to think that they would be operating here without a license for six or seven years, although I don’t know if they’re still doing business—that would involve applying for a license. I can’t imagine they would allow their drivers to pull such shenanigans. I’ve got to think somebody at the top was not minding the store.
Jason Halek is long gone, but so far, Black Hills Trucking is still around. I called their office in Williston (the number is 774-0011) and a female answered the phone “Black Hills Trucking” in a clipped voice. I said I was calling to see if they were still in business and she said “No comment.” I asked if there was anyone there who would comment and she said “No.” I asked again if they were still operating in North Dakota, and she repeated “No comment.” I thanked her for her time and hung up. I actually kind of felt sorry for her, because I could tell from the tone of just those two words she was just a functionary doing what she was told, with a lot of misgivings.
So maybe Wayne Stenehjem has a “live one” here. He’s certainly not saying “No comment.” He said in a press release “The state will not hesitate to bring criminal and civil actions when we learn of instances of illegal dumping. Those who blatantly disregard rules designed to protect the environment and keep our citizens safe will be held accountable for their actions.”
Read that again. “Blatantly disregard the rules designed to protect the environment and keep our citizens safe.” Hmmmm. Hey, Wayne, send that message across the hall to the guy in this headline: “Dalrymple: ND to use ‘every tool available’ to fight EPA.” Oh, yeah, that EPA. The one that writes those “rules designed to protect the environment and keep our citizens safe.”
Okay, Tanous, I’m done. Time to lighten up and plant potatoes.
Oh, one more thing. Just to prove to Tanous I am lightening up, I present the image below. You may remember a month or so ago I wrote about my dad, the optometrist, and his business card. Wayne Tanous was a particular subject of my dad’s attention (as I was of his), so he’ll appreciate this. Rummaging through some old boxes the other night, I found one of the cards I had mentioned in my blog post about my dad. Here it is.