North Dakota oil boom outpaces oversight

BISMARCK, N.D. — Understaffed and overwhelmed, government oilfield inspectors are struggling to provide adequate oversight amid an explosion of activity in North Dakota’s oil patch, state and federal officials told The Associated Press.

Hundreds of oilfield spills and thousands of waste disposal sites are being untended or are infrequently monitored because of a lack of personnel and funding, the officials said. And the staffing limitations come at a time when the industry — and a popular former governor — have pushed for a cut in state oil field taxes that help fund such monitoring programs.

“It’s a fire drill every day,” Lynn Helms, director of the state Department of Mineral Resources, said in an interview with the AP. “We need more properly trained enforcement people helping the industry stay on track.”

Oil production in North Dakota has boomed with the development of the Bakken and Three Forks formations, but oversight has not kept pace. Helms said the agency’s staffing is designed to handle 100 rigs and about 5,000 wells, whereas a record 169 rigs were drilling on Wednesday and more than 5,300 wells were pumping oil. About 2,000 more new wells are expected by the end of the year, Helms said.

Moreover, he said the agency has funding for 13 inspectors though only 12 are on the job at present.

Agencies that oversee oil production on federal land face some of the same inspection-staffing woes.

The state inspectors, who are geologists or engineers, inspect the construction of new wells, disposal wells that hold waste and abandoned wells.

They monitored a record 1,213 new wells last year, visiting each site at least six times during the three-week construction phase, Helms said. The inspectors ensure, among other things, that the steel pipe driven into the ground and cemented into place is done correctly to prevent groundwater contamination. Helms said the oversight of well construction is adequate but other monitoring is lacking.

Nearly 900 disposal wells that hold saltwater, a byproduct of oil production, and about 5,200 sites that hold other oil waste are being monitored only twice annually at best, agency records show. They should be visited at least six to 12 times a year “to keep bad things from happening,” Helms said.

Records show at least two wells that companies abandoned in the state’s oil patch have gone unplugged. The so-called orphan wells pose some of the biggest threats to groundwater supplies if not plugged correctly, but Helms said the agency doesn’t have the people or the funding to cap the wells at present and that’s dropped down the priority list.

“Production has gotten ahead of oversight and without the resources to protect the environment and health, you have a worst-case scenario,” said Wayde Schafer, a North Dakota spokesman for the Sierra Club. “Yikes.”

State Health Department records show 614 oil field-related spills were reported by companies last year, up from 478 in 2009. The number of reported spills this year — 127 through Wednesday — appears on pace to set a record.

Dave Glatt, director of the state Health Department’s environmental health section, said most spills are minor and are cleaned up quickly. Only 10 have resulted in fines or other sanctions in the past year, he said.

Glatt could not say how many oil field spills inspectors personally observed, saying, “we look at as many as one or two people can do.” The agency has had just one field inspector but recently shifted two workers from other duties, Glatt said.

Helms’ agency has a two-year, $11.6 million budget for the fiscal cycle that ends June 30. It is asking for a $2.6 million increase in the next budget cycle, which Helms said would allow for about a dozen more oilfield inspectors.

Ron Ness, president of the North Dakota Petroleum Council, said his group that represents about 250 companies supports a bigger budget for inspectors.

“It is a heavily regulated industry but you’ve got to have enough regulators there to make sure it’s being done right and we support it being done right,” Ness said.

Funding for the inspectors comes from the state’s 11.5 oil tax rate, which oil industry officials and former North Dakota Gov. Ed Schafer have pushed lawmakers to cut — though the state House defeated the proposed cut on Tuesday.

“Yes, we don’t have enough inspectors … but lowering the oil taxes doesn’t affect inspectors and oversight,” the former governor said. “This is a legislative issue. We have not been spending the money properly that’s coming off the resource.”

North Dakota is slated to collect about $961 million in oil taxes during its current budget period, and oil tax collections are expected to top $2 billion during the 2011-13 budget cycle.

The U.S. Forest Service, which monitors oil and gas drilling and production on North Dakota’s federal grasslands, monitors about 600 active oil wells at present but expects to oversee about 350 more in the next decade.

It is keeping pace with activity at present with its 18 inspectors, but would like to add at least three more — though federal budget constraints may keep that from happening, said Larry Melvin, mineral manager for the Forest Service.

“We’re in the same pickle as the state,” Melvin said.

Keeping pace with the booming oil activity on tribal land also has been a struggle, said Jim Albano, a spokesman for the Bureau of Land Management, which oversees oil development on the Fort Berthold Indian Reservation in western North Dakota.

The number of oil-related projects has risen from 13 in 2008 to 113 last year, and another 57 projects have been proposed so far this year. The agency has increased its inspection staff from four to six but would like to even more. About 160 wells have been drilled on the reservation so far and the BLM is forecasting the number to rise to 1,000 by 2018.

“It’s a challenge and it’s putting a lot of pressure on our staff,” Albano said. “Certain things are stacking up.”