An email sent yesterday to employees of Leland Olds Station, a lignite-fired power plant near Stanton, has created a stir in Coal Country that its shutdown is imminent. But the plant's owner, Basin Electric Power Cooperative, distributed a document today to clarify the company's plans.

The email sent by plant manager Jamey Backus informed employees that "senior management has decided to set the end of life on LOS Unit 1 at the end of 2025 and the end of life for LOS Unit 2 at the end of 2030." Backus' email went on to say that "I have been trying to find a pleasant way to convey this message but there just isn't one."

Basin management sent a follow-up message to employees today to clarify that "end of life" did not mean the plant would be shut down at that time. The document explained that Basin's 10-year financial forecast contains numerous assumptions such as expected demand, commodity prices, inflation rates, and governmental regulations, as well as "using margins to improve the balance sheet through additional acceleration of depreciation of coal assets."

The message points out that in January, Basin Electric’s board of directors authorized the adoption of an accelerated capital recovery plan for Leland Old Station Unit 1, but did not authorize a shutdown of LOS Units 1 or Unit 2. It said the financial forecast simply accelerates the recognition of depreciation expense scheduled to be recorded from 2026-2030 totaling about $50.1 million.

"This accelerated capital recovery plan will be built into the financial forecast, but does not solely determine the useful operational life of Leland Olds Station Unit 1," the message said. 

Basin's communique tried to reassure employees of the continued operation of the power plant.

"Basin Electric’s 10-year financial forecasts for generation have always included using baseload coal as a means of providing reliability. As member loads continue to grow within the membership, we know it is important to maintain our baseload generation to compliment other resources, including renewable energy, going forward."

The Leland Olds Station is Basin's first power plant and is capable of generating 666 megawatts. Unit 1 went on-line in 1966, and Unit 2 began commercial operation in 1975. The plant consumes lignite from the Freedom Mine near Beulah, which is is owned and operated by The Coteau Properties Company. The same mine supplies coal to Dakota Gasification Company, which is in the midst of a study to add a primary reformer at DGC that would allow the facility to use natural gas instead of coal.

Basin completed a major environmental upgrade at Leland Olds in 2013. The $410-million project added wet scrubbers to remove sulfur dioxide emissions from the flue gas produced by the power plant’s two units. In addition, a system was added in 2017 at a cost of $29 million help the plant meet nitrogen oxide reduction standards. 

Click here to read Basin's fact sheet about the recent board decision. Click here to learn more about Leland Olds Station.

Bills aimed at supporting North Dakota's lignite industry and discouraging unreasonable federal greenhouse gas regulations were withdrawn this week by their sponsors.

Bismarck Rep. Dave Nehring said he decided to pull HB 1458 because of perceived concerns that the wind tax legislation could adversely affect negotiations for the sale of Coal Creek Station. The owner of the 1,100-megawatt coal plant, Great River Energy, announced last year that it intends to shut down the facility by the end of 2002. However, state and local leaders are aggressively pursuing an agreement with interested buyers to continue its operation.

Nehring's bill would have imposed a tax equal to half the production tax credit that would be claimed by a new wind farm. Revenue from the tax would have gone into a grid reliability and resiliency fund, which would provide grants to baseload lignite coal plants. Nehring said his decision to withdraw the bill was difficult because its concept is solid. He said baseload plants need financial support because the loss of dispatchable generation threatens the reliability of the electric grid. 

"We are moving rapidly toward the precipice of significant grid reliability issues and higher electricity prices, along with the potential to lose a large number of high paying jobs," Nehring said. "These issues require urgent attention, and it is time for our legislative body, along with the assistance of our regulating agencies, and other stakeholders to address this issue."

Beulah Senator Jessica Bell also withdrew SB 2239, legislation that outlined the state's preferred approach to regulating greenhouse gas emissions. The bill directed the Department of Environmental Quality to promote the use of the most economic and efficient sources of electric generation; consider the financial ability of the state’s utilities to comply with the regulation; the ultimate cost of the regulation to the state’s consumers; and perhaps most importantly, the reliability of the grid.

Senator Bell said she withdrew the bill out of concerns that it would have put the DEQ at odds with the federal Environmental Protection Agency.

WDEA offered written testimony in support of both bills. Click here to see comments on HB 1458, and here for WDEA comments on SB 2239.

The chairman of the Mandan, Hidatsa and Arikara Nation told legislators this week the tribe is sending a "strong message" to the Biden administration, urging continued development of federal minerals and continued operation of the Dakota Access Pipeline.

In testimony before the Senate Finance and Taxation Committee in support of SB 2319 (see story below), Chairman Mark Fox said the tribe intends to let the new administration know the importance of developing the oil and gas resources on the Ft. Berthold Reservation, which are held in trust by the federal government.

Click here to listen to Fox's comments.

Although Fox didn't specifically mention the Dakota Access Pipeline (DAPL), he said it's not only essential that the tribe allow development of its resources, but that it have the ability to ship crude oil to market.

Click here to listen to Fox's comments.

Governor Doug Burgum also sent a letter to the U.S. Army Corps of Engineers this week, urging the Corp to allow DAPL to continue operating as the Corps develops a court-ordered Environmental Impact Statement (EIS) on the pipeline.

“Shutting down the pipeline during the EIS review would have devastating consequences for the State of North Dakota and a chilling effect on infrastructure investment across our nation,” Burgum said in the letter.

The letter emphasized that shutting down the safely operating pipeline would weaken U.S. energy security, create more competition for rail access for farmers, add unnecessary risk for motorists by putting more truck traffic on roads, and increase the price discount on Bakken crude. 

MHA also issued a separate statement regarding DAPL, expressing its concern about a letter circulating from federal lawmakers encouraging an immediate DAPL shut down, noting that the letter gave no consideration to "how any interruption in flow will impact oil and gas development within our reservation boundaries."

The North Dakota Legislature is being asked to approve legislation that would allow the MHA Nation to receive tax revenue from oil wells outside the Fort Berthold Indian Reservation that have laterals which penetrate the reservation underground.

MHA Chairman Mark Fox characterized SB 2319 as a follow-up to a 2019 re-write of the oil tax sharing agreement between the state and tribe (see article in March 22, 2019 newsletter). Tax revenue from wells on the reservation that extend underground outside the border is now shared between the state and tribe, but the tribe does not receive revenue from wells off the reservation that cross onto it. Fox said the bill was about tax fairness, and although a fiscal note shows the state would lose $13 million in revenue in the coming biennium, he said both parties would benefit.

Click here to listen to Fox's comments.

Fox also suggested that political pressure applied by the tribe would likely mean it would be possible to obtain permits to produce oil from production units that contain federal minerals, potentially offsetting the loss of state revenue. Click here to see the fiscal note on the bill, which indicates a $2.4 million loss to counties bordering the reservation.

The Senate Finance and Tax Committee passed the bill on a 7-0 vote, and it has been re-referred to the Senate Appropriations Committee.

North Dakota's crude oil output dropped around three percent, or about 35,000 barrels per day in December, but the state's top oil regulator said the dip in production was not a surprise.

Lynn Helms, director of the Department of Mineral Resources, noting that oil prices were low in December, said the decline was attributable to the fact that new well completions are not keeping up with the natural production decline in other wells.

Click here to listen to Helms' comments.

December output averaged about 1.19 million barrels per day, compared to close to 1.23 million barrels per day in November. Associated natural gas production averaged 2.89 billion cubic feet per day in December, nearly identical to the previous month's output. Producers were able to capture 94% of produced gas, putting the industry well ahead of the current 91% target.

Crude prices have climbed close to $60/barrel on the WTI index this week, driven partly by an executive order by the Biden administration to suspend oil leasing activity on federal land. But Helms said the price support is largely attributable by OPEC's decision to maintain its 7.2 million barrel/day production cut, which has reduced global crude inventories by about 2 billion barrels. He said whether OPEC maintains the voluntary cuts depends largely on the world's ongoing recovery from the COVID-19 pandemic. 

Click here to listen to Helms' comments.

Helms said future crude oil prices will also be impacted by Biden's regulatory initiatives, which are likely to have a chilling effect on any new drilling activity.

Click here to read or download Helms' monthly Director's Cut.

Costs of post-production royalty deductions are at the heart of an issue the North Dakota Legislature is being asked to resolve.

Natural gas associated with crude oil production is an added bonus for the state, but it costs money to capture, process and transport the gas to market. Because natural prices are low, those post-production costs may exceed the value of the gas, and producers offset the costs by deducting a portion from the royalties owed to mineral owners. Not surprisingly, a lot of mineral owners aren't too happy about it.

SB 2217, which was heard this week in the Senate Finance and Taxation Committee, aims to find a middle ground to settle the argument of who should be responsible for post-production expenses. The legislation would prohibit companies from taking post-production costs from royalty payments unless it is specifically covered in the lease agreement between the royalty owner and the producer.

Former Tioga legislator Bob Skarphol, founder of the Williston Basin Royalty Owners Association, testified in support of the bill. Skarphol said his group is not “anti-oil” but is rather “pro-mineral owner.” He said royalty owners are upset with the complex deductions, and trying to understand their royalty statements is challenging and intimidating.

Click here to listen to Skarphol's comments.

Sharphol said he understands the tough economic times facing the energy industry in North Dakota, but royalty owners face many of the same difficulties.

Click here for his comments.

The oil industry opposed the bill and many of the state’s top producers lined up to provide testimony including Hess, Continental Resources, Slawson Exploration and Petro Hunt. 

Ron Ness, President of the ND Petroleum Council, said the challenge comes from managing the cost of processing cheap natural gas. Ness said he empathizes with royalty owners, but pointed out they would not benefit from oil production if companies didn't capture and process the natural gas as mandated by state regulations.

Click here to listen to Ness' comments. 

Ness said the NDPC has been trying to get landowners and operators together, but since the dispute involves private contracts between parties, antitrust laws hold back NDPC's ability to be directly involved. Nevertheless, he feels the issue can best be resolved without government action.

Click here to listen to Ness' comments. 

The Senate Finance and Taxation Committee did not act on the bill this week. Click here for a Bismarck Tribune article on the bill, here for a story from the Dickinson Press and here for coverage from the Tioga Tribune. 

Should the legislature continue to meet once every two years or, because circumstances can change quickly, get together every year?

Williston Senator Brad Bekkedahl, the prime sponsor of SB 2218, thinks the state should have annual sessions. Bekkedahl said North Dakota is now one of just four states that still conduct legislative sessions every two years. The others are Texas, Nevada and Montana.

Bekkedahl said “times are changing,” pointing out that not long ago the state budget was just $1.5 billion per biennium. Now it’s more than $14 billion, so lawmakers need to “react better to changing revenue environments.”

Click here to listen to Bekkedahl's comments. 

The proposed legislation, which was heard this week in the Senate Appropriations Committee, would continue sessions in odd-numbered years, and add what Bekkedahl termed a “short session” in even-numbered years. The bill would not add any length to the session, which is constitutionally limited to 80 days each biennium. Since no new days would be added, Bekkedahl said the cost to meet annually would be the same as meeting every two years. The bill directs Legislative Management to decide the timing and duration of the sessions.

The bill's only opponent, Pete Hanebutt representing the ND Farm Bureau, said his organization has long supported the biennial session. Hanebutt also spoke from personal experience about annual sessions when he lived in Indiana, which he said grew government and ultimately changed who could afford to serve in the legislature.

Click here to listen to Hanebutt's comments. 

The legislation was previously approved unanimously by the Senate Government and Veterans Affairs Committee. The Appropriations Committee took no action on the bill.

Making a switch to permanent daylight savings time seems to be a popular concept in the North Dakota Legislature this session. 

The Senate approved SB 2201 this week on a 36-11 vote, and the legislation now moves to the House which has under consideration a similar bill, HB 1371, that received a “do pass” recommendation from the House Political Subdivisions committee. 

Both bills push the state to keep daylight saving time year around. The Senate version, however, was amended to require that North Dakota aligns with neighboring states by delaying implementation until the same time standard is accepted by Minnesota, Montana and South Dakota. 

The potential lack of consistency between neighboring states, especially in border towns, was the primary argument from those opposed to the legislation. 

Senate sponsor Jason Heitkamp of Wahpeton told members of the Senate Political Subdivisions Committee the legislation would eliminate the transition between Daylight Saving Time and Standard Time, but would not affect time zones. 

Click here to listen to Heitkamp's comments.

The impact of a time change on young children was described in Senate committee testimony by Melissa Engelstad, a Fargo mother of three. “For most children, it’s horrible,” she said. “Our children are cranky, tired, sensitive to everything, have negative behaviors and even emotional outbursts.” Engelstad explained how the change similarly affects adults with impacts on mood, motor skills, appetite and even heart health. Seasonal depression coming from early winter sunsets is also a factor. 

Making the change would also require Congressional approval but the probability of acceptance is more likely since 13 states have already adopted the legislation and, according to Heitkamp, at least five more states are prepared to act on the legislation.

Click here for an article about the discussion from the Fargo Forum.  

A pro-coal message posted on WDEA's Facebook page Sunday morning went "viral," reaching nearly 170,000 users of the social media site.

The message pointed out that about 55% of the electricity being used on the MISO grid was being generated by coal-fired power plants, and urged readers to "thank a coal miner or power plant worker for keeping your lights on." The post was shared almost immediately by the popular Facebook group, Faces of North Dakota Coal, and from there the post spread like wildfire and has been shared by more than 2,000 Facebook users.

Not only did the post generate a lot of "impressions," it created a lot more interest in WDEA's Facebook site. The page was "liked" by an additional 260 users this week, who will now see WDEA posts in their news feed, as well as 269 new followers.

Click here to see WDEA's Facebook page. Click here to see the Facebook post.

Thanks to a generous $1 million kick-starting gift from the Engelstad Foundation, the tourist experience at Medora will soon be easier to enjoy by guests with disabilities. 

The first project of the initiative is a pair of high-capacity elevators at the Burning Hills Amphitheatre dedicated to guests with mobility challenges. Construction of the system will begin this year and be ready for the 2022 Medora Musical season.

Currently, guests who require assistance are shuttled in golf carts on a walkway shared with pedestrians, and on busy nights, can experience up to an hour wait for a ride out of the theater. The new, high-capacity elevators should reduce wait times to just a few minutes.

Randy Hatzenbuhler, President of the Theodore Roosevelt Medora Foundation (TRMF), said it will be a significant improvement in access. 

Click here to listen to Hatzenbuhler's comments. 

The high-capacity elevators are just the first of many planned improvements TRMF will be implementing as part of the “Access Medora” initiative to make the community's tourist attractions widely available to everyone.

In order to better serve state residents, the ND Department of Transportation is in the process of installing nine new kiosks around the state this week.

This installation is part of an ongoing project to add 44 new locations and increase the options customers have when doing business with the NDDOT. The new self-service terminals will have several features not included with previous models including the addition of driver license services this spring.

“We strive to provide innovative solutions to the citizens of North Dakota,” said NDDOT Director Bill Panos. “These self-service terminals will greatly enhance our ability to service our customers and provide them more flexibility when conducting business during this pandemic.”

In the future, the terminals will also include devices for blind and low vision citizens to navigate the screens. Citizens will be able to plug in headphones to hear what is displayed on the screen. New site locations installed this week include the Kum & Go in Hettinger, the Grant County Recorder’s office, Jason’s Super Foods in Crosby, and the Watford City Treasurer’s office.  

The NDDOT will provide updates as more locations are added. For more information on the kiosk program, click here. 

Click here for a story on the NDDOT kiosks from KXMB-TV.

The Williston Basin Petroleum Conference is coming up in May, and hopefully it’s a sign of things to come since it will be a “live and in-person” event. 

North Dakota Petroleum Council President Ron Ness said the conference will be an important time to get industry professionals together to talk about the future of energy and to share ideas and make valuable contacts. 

For those unable to travel, the conference will be available to virtual attendees. Click here to register for the Williston Basin Petroleum Conference.  

With blood banks around the region continuing to experience shortages, the ND Petroleum Foundation and Vitalant are stepping up to help organize several blood drives around the Bakken in the months to come. 

The Foundation and the ND Petroleum Council are urging industry members and employees to help save a life by participating in one of the drives taking place in several western North Dakota communities.

February 16: Beach 
February 16 Williston 
February 26: Tioga
March 6: Dickinson 

For the specific event times and locations, click here. To search for other dates or locations, click here.