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2016 Rule Changes FAQ

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On Wednesday, June 29, 2016 the North Dakota Industrial Commission approved a comprehensive set of rules for the conservation of crude oil and natural gas.

The nearly 60 page order addresses new requirements for the oil and gas industry in the State of North Dakota, such as site construction, underground gathering pipelines and spill containment.

The purpose of this document is to summarize some of the more technical rules.

When will the rules go into effect?

A portion of the rules became effective October 1. Six sections of rules were held over in September by the Administrative Rules Committee. Those sections related to bonding requirements for underground gathering pipelines, authority over underground natural gas gathering pipelines and requirements for berms around facilities. On November 7 the North Dakota Industrial Commission approved changes to the six sections that were held over. Those updated rules will be presented at the December 5 Administrative Rules Committee meeting for approval. If approved by the committee, the remaining rules will become effective on January 1, 2017.

Pipelines:

Perimeter Berms:

Saltwater Handling Facilities:

Miscellaneous:


Pipelines:

Are flowlines subject to the new bonding, notice, and pipeline construction rules?

No – the Industrial Commission added a definition for flowlines and excluded flowlines from bonding, notice, and construction requirements.

Are injection pipelines subject to the new bonding, notice, and pipeline construction rules?

No – the Industrial Commission added a definition for injection pipelines and excluded injection pipelines from bonding, notice, and construction requirements.

Are EOR unit pipelines subject to the new bonding, notice, and pipeline construction rules?

No – the Industrial Commission excluded EOR unit pipelines from bonding, notice, and construction requirements.

When does a bond have to be posted for a pipeline system?

All crude oil and produced water underground gathering pipelines in use after April 19, 2015 will have to be bonded. Each pipeline system can be bonded separately or covered by a blanket bond for all of an owner’s pipeline systems. Owners of crude oil and produced water underground gathering pipelines in use after April 19, 2015, but constructed before the rules become effective must submit bond information and receive bond approval from the Industrial Commission prior to July 1, 2017. Following the effective date of the rules, all newly constructed crude oil or produced water underground gathering pipelines must be bonded with bond information submitted and approved by the Industrial Commission prior to placing the pipeline into service (i.e. once the rule goes into effect, if a new crude oil or produced water underground gathering pipeline has not been placed into service then the pipeline must be bonded prior to placing it into service).

What does newly constructed mean?

Newly constructed means pipeline segments or systems that are constructed after the effective date of the rules.

Does an underground gathering pipeline need a permit?

No – the notification rule adopted by the Industrial Commission only requires at least 7 days advance notice that a crude oil or produced water pipeline is going to be constructed. The information required in the notice is listed in N.D.A.C. § 43-02-03-29.1 subsection 3.

What is required if damage occurs to another structure or pipeline during construction of an underground gathering pipeline?

Immediate verbal notification is required if damage occurs to any underground gathering pipeline, flow line, or other underground equipment used to transport crude oil, natural gas, carbon dioxide, or produced water in association with oil and gas, during construction, repair, or abandonment of an underground gathering pipeline (i.e. if any damage occurs to a pipeline or other underground equipment under the Industrial Commission’s jurisdiction while excavating for an underground gathering pipeline immediate verbal notification is required by the responsible party).

What is required if drilling will occur under environmentally sensitive areas?

The Industrial Commission requires crude oil or produced water underground gathering pipelines be installed in a manner that minimizes impacts to environmentally sensitive areas, such as wetlands, streams, or other surface waterbodies. If the underground gathering pipeline owner determines horizontal directional drilling (HDD) is the best method to minimize impacts to an environmentally sensitive area then any HDD plan prepared by the owner must be filed with the Industrial Commission, prior to commencement of HDD. If necessary, the Director can also require a HDD plan be prepared and filed with the Industrial Commission.

Does an underground gathering pipeline have to be designed so it can be pigged?

No – the rule allows for alternate internal cleaning methods such as flushing with water, or surfactants.

Do all underground gathering pipelines need a leak protection, detection, and monitoring plan?

No – if the crude oil or produced water pipeline owner prepares a leak detection plan it must be filed with the Industrial Commission. However, the Director is authorized under N.D.C.C. § 38-08-27 to require that a leak protection and monitoring plan be prepared for crude oil or produced water underground gathering pipelines placed into service after August 1, 2015.

What’s the difference between leak detection and leak protection?

Leak detection is an internal or external method of monitoring for a loss of fluid. Leak protection is incorporated into the pipeline design, testing and maintenance to ensure pipeline integrity and to prolong the operating life of a pipeline.

Is Computational Pipeline Monitoring required for Underground Gathering Pipelines?

No – Computational pipeline monitoring is not required.

What is required in an underground gathering pipeline spill response plan?

The Industrial Commission does not prescribe specific requirements, only that a spill response plan must be maintained during the service life of any crude oil or produced water underground gathering pipeline. The spill response plan should detail the necessary steps for an effective and timely response, be tailored to specific risks in the localized area, and address access to equipment and tools necessary to respond. Initially, spill response plans prepared for federal agencies or other state agencies will satisfy this requirement.

What is required in an underground gathering pipeline data sharing plan?

All crude oil and produced water underground gathering pipeline owners must develop and maintain a data sharing plan. The data sharing plan must allow for real-time sharing of data between the operator of the production facility, the underground gathering pipeline owner, and the operator at the point or points of disposal, storage, or sale.

What does “real-time data sharing” mean?

Real-time data sharing means making up-to-date pipeline information available to the operator of the production facilities, the pipeline owner/operator, and the operator of the point of disposal, storage, or sale in order to facilitate effective pipeline monitoring. Up-to-date pipeline information includes information such as, volumes, flowrates, and pressures. This must be accomplished through a collaborative effort to provide such pipeline data within a reasonable time after it is collected, although the Commission does not expect stakeholders to have access to one another’s databases.

What jurisdiction does the NDIC have over underground gathering pipelines?

The North Dakota legislature has defined the Industrial Commission’s jurisdiction over underground gathering pipelines as follows:

38-08-02. DEFINITIONS.

     12. “Pipeline facility” means a pipeline, pump, compressor, storage, and any other facility, structure, and property incidental and necessary or useful in the interconnection of a pipeline or for the transportation, distribution, and delivery of energy-related commodities to points of sale or consumption or to the point of distribution for consumption located within or outside of this state.
     18. "Underground gathering pipeline" means an underground gas or liquid pipeline with associated above ground equipment which is designed for or capable of transporting crude oil, natural gas, carbon dioxide, or water produced in association with oil and gas which is not subject to chapter 49-22. As used in this subsection, "associated above ground equipment" means equipment and property located above ground level, which is incidental to and necessary for or useful for transporting crude oil, natural gas, carbon dioxide, or water produced in association with oil and gas from a production facility. As used in this subsection, "equipment and property" includes a pump, a compressor, storage, leak detection or monitoring equipment, and any other facility or structure.

38-08-26. SUBMISSION OF GEOGRAPHIC INFORMATION SYSTEM DATA ON OIL AND GAS UNDERGROUND GATHERING PIPELINES REQUIRED.

     1. The commission shall create a geographic information system database for collecting pipeline shape files as submitted by each underground gathering pipeline owner or operator. The shape files and the resulting geographic information system database are exempt from any disclosure to parties outside the commission and are confidential except as provided in this section. The information may be used by the commission in furtherance of the commission's duties.
     2. An owner or operator of an underground gathering pipeline shall submit to the commission, in a time period no longer than one hundred eighty days of putting any underground gathering pipeline into service, a shape file showing the centerline of the pipeline. Upon abandonment of any underground gathering pipeline, the owner or operator shall submit, in a time period no longer than one hundred eighty days of abandonment, to the commission an updated shape file reflecting the pipeline or portion of a pipeline that has been abandoned. For an oil and gas underground gathering pipeline that is in service after August 1, 2011, and before August 1, 2013, the owner or operator or most recent owner or operator shall submit, within eighteen months from August 1, 2013, shape files for all existing underground gathering pipelines, including any known abandoned pipeline.
     3. Upon a written request by the owner or tenant of the real property regarding underground gathering pipelines located within the bounds of the real property owned or leased by that property owner or tenant, the commission shall provide to the owner or tenant the requested information. The commission may not include information, if available, on any underground gathering pipeline that exists outside the bounds of the real property owned or leased by the requesting party.
     4. Upon request by the tax commissioner, the commission may allow access to information contained in the geographic information system database to the tax commissioner to be used for the sole purpose of administering the valuation and assessment of centrally assessed underground gathering pipeline property under chapter 57-06. The information obtained under this subsection is confidential and may be used only for the purposes identified in this subsection.
     5. The surface owner may share information contained in the geographic information system database.

38-08-27. CONTROLS, INSPECTIONS, AND ENGINEERING DESIGN ON CRUDE OIL AND PRODUCED WATER UNDERGROUND GATHERING PIPELINES.

The application of this section is limited to an underground gathering pipeline that is designed or intended to transfer crude oil or produced water from a production facility for disposal, storage, or sale purposes and which was placed into service after August 1, 2015. Upon request, the operator shall provide the commission the underground gathering pipeline engineering construction design drawings and specifications, list of independent inspectors, and a plan for leak protection and monitoring for the underground gathering pipeline. Within sixty days of an underground gathering pipeline being placed into service, the operator of that pipeline shall file with the commission an independent inspector's certificate of hydrostatic or pneumatic testing of the underground gathering pipeline.

The Industrial Commission’s regulatory authority encompasses all underground gathering pipeline GIS data, construction, operation, and abandonment within the State of North Dakota including pipelines located on federal and tribal government lands.

In certain instances the Industrial Commission shares jurisdiction over underground gathering pipelines with the federal Pipeline Hazardous Materials Safety Administration (PHMSA) and/or the MHA Energy Division.


Perimeter Berms:

Do all well sites and facility sites have to have a perimeter berm now?

No- sites will only require berms if the operator is notified by the Commission that one is needed. Once notified, a perimeter berm at least six inches in height constructed of sufficiently impermeable material to provide emergency containment and to divert surface drainage away from the site around all storage facilities and production sites that include storage tanks, have a daily throughput of more than one hundred barrels of fluid per day, and include production equipment or load lines that are not contained within secondary containment dikes. The Director may consider an extension of time to implement these requirements if conditions prevent timely construction; or a modification of these requirements if other factors are present that provide sufficient protection from environmental impacts.

When does a site have to have a perimeter berm?

Within 180 days from the date the operator is notified by the Commission.

Why was the perimeter berm rule proposed?

The Oil and Gas Division tracks performance measures, such as spill statistics to understand if rules that are in place are adequate. Data show that the percentage of spills that are contained to a well pad has decreased since 2013. Further analysis reveals that the types of spills that should be contained to a well pad, are escaping. In order to prevent these spills from leaving the well pad, which are designed to minimize the impact on the environment, the berm rule was proposed.

What jurisdiction does the NDIC have over perimeter berms?

Pursuant to NDCC Section 38-08-04(2)(a), the Commission has the authority to regulate the drilling, producing, and plugging of wells, the restoration of drilling and production sites, and all other operations for the production of oil or gas.

Pursuant to NDCC Section 38-08-04(2)(e), the Commission has the authority to regulate the disposal of saltwater and oilfield wastes.

NDAC Section 43-02-03-49 states in part, within one hundred eighty days from the date the operator is notified by the commission, a perimeter berm, at least six inches [15.24 centimeters] in height, must be constructed of sufficiently impermeable material to provide emergency containment and to divert surface drainage away from the site around all storage facilities and production sites that include storage tanks, have a daily throughput of more than one hundred barrels of fluid per day, and include production equipment or load lines that are not contained within secondary containment dikes. The director may consider an extension of time to implement these requirements if conditions prevent timely construction; or a modification of these requirements if other factors are present that provide sufficient protection from environmental impacts.

NDAC Section 43-02-03-51.3 states in part, a perimeter berm, at least six inches [15.24 centimeters] in height, must be constructed of sufficiently impermeable material to provide emergency containment around the treating plant and to divert surface drainage away from the site if deemed necessary by the director.

NDAC Section 43-02-03-53.3 states in part, within one hundred eighty days from the date the operator is notified by the commission, a perimeter berm, at least six inches [15.24 centimeters] in height, must be constructed of sufficiently impermeable material to provide emergency containment around the facility and to divert surface drainage away from the site. The director may consider an extension of time to implement these requirements if conditions prevent timely construction or a modification of these requirements if other factors are present that provide sufficient protection from environmental impacts.

The Industrial Commission’s regulatory authority encompasses all well sites, treating plants, and saltwater handling facilities within the State of North Dakota including those located on federal and tribal government lands, although the Commission has dual jurisdiction on certain federal and tribal lands.


Saltwater Handling Facilities:

What type of salt water handling facilities have to be bonded?

Saltwater handling facilities using a tank or group of tanks as a holding or transfer station that are not currently bonded as an appurtenance to an oil well, gas well, saltwater disposal well, or treating plant, will be required to obtain a permit and submit a bond in the amount of $50,000.

How are other types of salt water handling facilities bonded?

Saltwater handling facilities that are an appurtenance to an oil well, gas well, saltwater disposal well, or treating plant are covered under the permit and bond of such well or facility.

What existing saltwater handling facilities need a permit?

Existing saltwater handling facilities which are not currently bonded as an appurtenance to a well or treating plant have 90 days from the date notified by the Commission to submit an application for a permit.

What jurisdiction does the NDIC have over saltwater handling facilities?

Pursuant to NDCC Section 38-08-04(2)(a), the Commission has the authority to regulate the drilling, producing, and plugging of wells, the restoration of drilling and production sites, and all other operations for the production of oil or gas.

Pursuant to NDCC Section 38-08-04(2)(e), the Commission has the authority to regulate the disposal of saltwater and oilfield wastes.

NDAC Section 43-02-03-01 defines "saltwater handling facility" as any container and site used for the handling, storage, disposal of substances obtained, or used, in connection with oil and gas exploration, development, and production and can be a stand-alone site or an appurtenance to a well or treating plant.

NDAC Section 43-02-03-15 states in part, prior to the commencement of operations, any person proposing to operate a saltwater handling facility that is not already bonded as an appurtenance shall submit to the commission and obtain its approval of a surety bond or cash bond.

NDAC Section 43-02-03-51.3 states in part saltwater handling facility may not be constructed without obtaining a permit from the commission. Saltwater handling facilities in existence prior to October 1, 2016, which are not currently bonded as an appurtenance to a well or treating plant, have ninety days from the date notified by the commission that a permit is required to submit the required information in order for the commission to approve such facility.

The Industrial Commission’s regulatory authority encompasses all saltwater handling facilities within the State of North Dakota including those located on federal and tribal lands, although the Commission has dual jurisdiction with federal and tribal governments.


Miscellaneous:

What is a portable collapsible receptacle?

Such receptacles utilize a sealed inner bladder contained within a portable and collapsible support structure erected to conform to American petroleum institute standards (for example the Minion tank brand).

What does “or could occur” mean for production reporting?

This amended rule clarifies that a production report is due for any oil or gas well that is completed in a pool but did not produce during the month.

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