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Industrial Commission talks DAPL, oil production cuts

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North Dakota’s Industrial Commission could be filing a “friend of the court” brief in an appeal of a federal judge’s ruling that the Dakota Access Pipeline be shut down, while the Corps of Engineers completes an Environmental Impact Statement on the Pipeline.

The ruling says Energy Transfer Partners has a month to empty the pipeline. The company has appeals in motion to allow that pipeline to continue to operate.

The Commission chairman, Gov. Doug Burgum, said the state needs to show to the courts the economic harm that will come if the pipeline is shut down.

"It's imperative that the state of North Dakota not just casually, but accurately and in the most fulfilling way possible, describe for the courts the devastating economic impact it would have -- not just on oil companies, but on schools, roads and water projects, health care and everything in North Dakota funded by this thing," Burgum said. "Not to mention the jobs and the companies."

State Pipeline Authority director Justin Kringstad said some of the crude could be shipped by rail – but it will take time to get the rail cars back. And he said with the premium of around $5.00 a barrel to ship by rail, it may not make economic sense for some companies to do that.

Burgum said that, too, is a concern.

"That will cause capital and labor -- as in the skilled labor we need to produce this -- will move to other basins, not here," Burgum said. "We could have both a short-term and a long term negative effect."

Federal judge James Boasberg turned down a petition from Energy Transfer Partners to allow the pipeline to continue to operate while the Corps does the E-I-S. That ruling allows the company to take the case to a federal appeals court -- and the company has said it plans to make that appeal.

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Oil Production cuts

The Commission has also decided against imposing mandatory oil production cuts.

The issue came up when oil prices dropped in April.  In the early days of the state's oil development, such manatory cuts were imposed a few times. 

The Commission held a long hearing on that issue in May. State mineral resources director Lynn Helms said 45 parties testified. Three supported the idea, two were neutral, and 40 opposed it.

"The oil markets and the oil industry have become enormously complex," Helms told the Commission. "And the consequences on that complexity of a waste finding and proration would, for the most part, be very, very negative, and would discourage investment in North Dakota oil and gas development and production."

"Let's let the private sector hammer out some of these things," said North Dakota Agriculture Commissioner Doug Goehring, a member of the Industrial Commission. "Where government can assist and intervene, we will do so. But it's probably best if we don't go down this road."

Texas and Oklahoma have also rejected mandatory production cuts.

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