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ND oil regulator: Fed rules may threaten industry

BISMARCK - The possibility of tighter federal regulations is one of the challenges that lies ahead for North Dakota oil production and the Department of Mineral Resources, as the state agency seeks more funding from the Legislature.

The time it takes to obtain drilling permits could triple and the state could potentially lose billions of dollars, Lynn Helms, director of Mineral Resources, told the House Appropriations Committee Thursday,

"It's not all roses and sunshine, that's why we don't build a budget around 2 million barrels a day," he told them. "There are serious risk factors out there we have to factor in."

Helms highlighted potential regulations by the Environmental Protection Agency and Bureau of Land Management regarding oil wells that could slow production down.

Permits affiliated with oil production could take between 60 and 90 days -- compared to 18 days in 2012 -- due to public notices and hearings that could come from federal regulations.

Drilling capital could be reduced as much as 50 percent with tax proposals by the Obama administration, Helms said.

"He tells it to us like it is," Rep. Robert Skarphol, R-Tioga, said. "It's his job to keep us informed so we can be effective in ours."

Skarphol, a member of the House Appropriations Committee, said the national challenges the Department of Minerals could face is a concern and something that should always be monitored.

He noted the national issues that affect North Dakota help create more communication with North Dakota's congressional delegates.

Helms also has requested $1 million for legal services as he is expecting to be part of some lawsuits over the pending federal regulations.

"We want to be at the table when that lawsuit happens," he told the legislators.

Helms said North Dakota's Attorney General Wayne Stenehjem helped decide the amount, but 12 other states are in the same situation, and will likely be a part of lawsuits related to oil and gas production.

"We will have heavy hitters with big budgets backing us up on that," he said. "The $1 million is appropriate for two-year time frame, but we might have to come back and beef that up -- it's enough to ensure we are in the fight."

Rep. Bette Grande, R-Fargo, said funding for possible lawsuits is customary, noting the state Legislature has done it for the coal and railroad industry in the past.

But while potential issues may be of concern, the Bakken oil field development continues. But as Helms pointed out, competitors are close behind.