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North Dakota Agriculture Commissioner Doug Goehring, left, and North Dakota Gov. Jack Dalrymple listen to a presentation at a state Industrial Commission meeting on Tuesday in the governor's conference room in the North Dakota Capitol in Bismarck. The Industrial Commission endorsed a proposal to create a 30,000-acre oil unit north of Killdeer.

Regulators OK huge oil unit near Killdeer

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Bakken Dickinson,North Dakota 58602
The Dickinson Press
Regulators OK huge oil unit near Killdeer
Dickinson North Dakota 1815 1st Street West 58602

BISMARCK (AP) -- North Dakota regulators on Tuesday approved a huge new oil production unit north of Killdeer that includes a state park and thousands of acres of rugged, scenic land in the state's western Badlands.


The formation of the Corral Creek-Bakken unit, which covers almost 50 square miles, will allow production of up to 43 million barrels of oil while using fewer oil drilling pads and tank storage

batteries, said Lynn Helms, director of the state's Department of Mineral Resources.

"The number of trucks will be much, much less because the gas, the oil and the water are all going to move by pipeline," Helms said. "It's much more efficient in terms of the impacts and use of the landscape."

The unit plan is the first for the Bakken and Three Forks oilfields in western North Dakota, which have been mostly responsible for the state's boom in energy development.

It will allow what normally would be hundreds of individual oil drilling leases to be managed as one. Revenues will be divided among property owners within the unit who have a claim on the land's oil income.

Burlington Resources Inc., which is part of ConocoPhillips of Houston, will manage the unit. Burlington, the State of North Dakota and the federal government collectively own more than 60 percent of the unit's mineral production rights, which is a large enough share to seek approval of a unit plan.

The state Industrial Commission, in endorsing the proposal Tuesday, said Burlington would have to report on the progress of its development plans in January 2016. Helms said land tracts that are not drilled by then could be removed from the unit and leased separately.

Gov. Jack Dalrymple, the commission's chairman, said the deadline would help allay some landowners' fears that Burlington would take six years or more to finish the 80 oil wells it plans to drill. The unit already has 12 producing wells.

Helms said Burlington expects to finish its drilling work in 3-1/2 years. A spokesman for ConocoPhillips did not respond Tuesday to a telephone request for comment.

Other property owners said they were worried about the freedom Burlington will have to locate pipelines, roads and other infrastructure within the unit's boundaries.

The company must pay individual landowners for use of their property, but it will not have to seek permission from individual landowners before building.

"Surface owners still are losing the right to say no to anything," said Candyce Kleeman, who ranches near Killdeer. "We used to have to allow access to a 1,280 (acre) area. We are now having to allow access to a 30,000-acre area ... The land that they're going on is the stuff we live on."

The unit sits in Dunn County in southwestern North Dakota, about 15 miles north of Killdeer, south of the Little Missouri River. It includes the Little Missouri State Park.

It should produce about 43 million barrels of oil, compared to the 28 million that would likely have been pumped if the property were broken up into smaller drilling units, Helms said.

Developing the land as a 30,000-acre unit, rather than using the more typical 1,280-acre spacing units for drilling oil wells, would have less impact on the land and help avoid marring scenic park views, Helms said.

The wells can be more efficiently serviced by fewer oil well drilling pads and storage tank batteries, which will reduce impact on the land and keep tanks out of the state park, he said.

"It will keep pads up out of the Little Missouri flood plain, and pads and tank batteries out of the park, which are two ... very important goals," Helms said.

He said the unit arrangement also will make it easier to use pipelines, rather than trucks, to transfer oil.

The Industrial Commission consists of Dalrymple, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring. The commission oversees the Department of Natural Resources and oil and gas regulation in North Dakota.

In September, the last month for which statistics are available, North Dakota produced 14 million barrels of oil and had just more than 6,000 producing wells. In September 2006, the state produced 3.4 million barrels from about 3,600 wells.