Making a change in practices, state to take a closer look at oil industry fines

BISMARCK - Proposed fines against oil companies will get more scrutiny from the North Dakota Industrial Commission on Monday, but the discussion will occur behind closed doors.

BISMARCK – Proposed fines against oil companies will get more scrutiny from the North Dakota Industrial Commission on Monday, but the discussion will occur behind closed doors.

The Industrial Commission agenda for Monday includes discussion of six complaints against oil companies accused of violating state oil and gas regulations.

It’s a departure from how the commissioners - Gov. Jack Dalrymple, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring – have handled such cases recently.

Typically, the commission receives a list of complaints and proposed fines in a quarterly report, but commissioners have said they want updates more often, said Karlene Fine, executive director for the Industrial Commission.

“The commission indicated they’d like more background information,” Fine said.


The Industrial Commission has received public criticism recently for its common practice of reaching settlement agreements with oil companies and suspending all but 25 percent to 10 percent of fines.

Alison Ritter, spokeswoman for the Department of Mineral Resources, said commissioners have said they want to review more of the agreements.

Fine said she doesn’t think the change in practice is a response to that criticism, but rather a desire to get information on a more timely basis.

The discussion Monday will occur during a closed executive session to allow commissioners to discuss the cases with their attorneys.

A Democratic senator from Fargo pushed last legislative session for more transparency of settlement agreements with the oil industry. A bill introduced by Sen. Tyler Axness would have required members of the Industrial Commission to take a public roll call vote each time a case is settled.

The Industrial Commission opposed the bill and Lynn Helms, director of the Department of Mineral Resources, testified against it.

The bill failed in the Senate along party lines, with the exception of Sen. David Rust, R-Tioga, who supported it.

“If this was a public matter, there may be changes in some attitudes and practices,” Axness said Friday.


Rust said he supported the bill because some of his constituents were upset about fines that were dramatically reduced. Rust said he sees merit in reducing fines if it’s to ensure that a site gets cleaned up, but he thinks the commissioners should periodically revisit their practice to see if it’s still working.

Helms has defended the practice of suspending fines because he said it deters repeat offenses.

However, two of the complaints on Monday’s agenda are for Oasis Petroleum, and one of the incidents appears to be similar to a previous violation.

In May, Oasis paid $16,500 in fines and fees to the state - with $60,000, or 80 percent - suspended for one year. The settlement stemmed from a November 2014 mechanical failure that caused a well to release uncontrollably for three days in Williams County.

Now the Industrial Commission proposes a $100,000 fine for Oasis for violations related to an out-of-control well that spewed oil, gas and brine for four days near the White Earth River in Mountrail County in October.

In addition, the Industrial Commission will discuss Monday a $87,500 fine proposed for Oasis for a May saltwater pipeline spill that affected a creek and Smishek Lake in Burke County.

The other companies to be discussed are:

-- Black Gold Energy Resource Development, which faces potential fines of $325,000 fine for an October 2014 complaint. In that case, the company is accused of having leaking tanks and improper diking at a well location in Dunn County. The commission also alleges the company failed to properly file oil and gas production reports. A complaint against Black Gold Energy Russian Creek Facility proposes $12,500 in fines for the same allegations of leaking tanks and improper diking.


-- Pride Energy faces up to $75,000 in fines from a November 2014 complaint that alleges the company failed to get required regulatory approval and file proper oil production reports for wells in McKenzie County.

-- Jettison Inc. faces a potential fine of $25,000 for not completing reclamation on a well in Billings County that was plugged and abandoned in October 2012.

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