Sustainability a topic at oil conference, but North Dakota still 'running toward fossil fuels' (2024)

The topic of sustainability for fossil fuelshas been a focus this week at the Williston Basin Petroleum Conference in Bismarck, but so has pushback against new federal regulations and incentives aimed at addressing climate change.

Some speakers in comments to attendees of the three-day annual oil industry conference expressed hopes for a change in the presidency come 2025, highlighting gripes with the Democratic Biden administration's energy policies. Others were less direct on politics, but praise of federal policy was scarce.

Still, if Republican Donald Trump wins the election,even some major efforts to manage North Dakota's output of climate-warming greenhouse gases from fossil fuels are unlikely to be completely erasedgiven the growing use of private investment tools for abating emissions.

"We can only hope that we have a new administration, but if anyone thinks the capital markets are going away, they control the purse and they create a tremendous opportunity for them to trade around (carbon dioxide), they're not going to give it up," said Stacy Tschider, president of Bismarck-based Rainbow Energy Center,during a panel Tuesdayon sustainability.

"We're blessed as a private entity not to be hostage to Wall Street, but we are hostage to the fact that we need financing, we need insurance to go forward and so when we look at it, (with) a new administration (if) we say, 'Okay it's all over, we can take our toys and go home,' that is not the way the world is going to work going forward," he said.

Tschider's firm in 2022 bought Coal Creek Stationin McLean County and a valuable power line which sends Coal Creek's energy to the Twin Cities. The purchase prevented an impending shutdown ofNorth Dakota's largest coal-fired power plant after it had incurred years of losses. Rainbow has intentions to make the plant "fully circular," an effort which has been aided by millions in federal and state funding but has also had some early stumbling blocks.

Going green?

Three years ago, Gov. Doug Burgum at the conferenceannounced intentions to get the state to carbon neutrality by 2030 without mandates or regulation. Much of this effort so far has involved moving to put nascent carbon capture technology on coal-fired power plants and ethanol processing facilities.

Lower emissions aims will not just come from the private sector.

Officials from the state-owned Bank of North Dakota spoke to the development of a plan for how it could improve its ESG ratings and make the state more attractive for investors concerned about them as well. The acronym refers to indexes that rate how well the investments of financial institutions meet "environmental, social, and governance" metrics to incentivize more "socially conscious" investment.

The bank hired Kayla Ver Helst as a sustainability officer to put together a study along with the help of 26 state and industry officials to find where the state can highlight how its actions already line up with ESG goals and ways it could move forward.

“We have to help people find the information that’s already available so they can make accurate assumptions about our state because if we have this data gap, we can’t control the conversation at all,” Ver Helst said.

There will be recommendations on how to move forward for state industries, but it will all be voluntary, she said. The report will be available in June.

Where the state of North Dakota intends to put much of its focus is not likely to change, said BankChief Business Development Officer Kelvin Hullet.

"We're running toward fossil fuels and we're going to ensure that as our state moves forward in the energy and agriculture space that our products can compete in this carbon-managed world," Hullet said.

But large green investments are also likely to continue, said Mel Schwarz, director of legislative affairs for consulting firm Eide Bailly.

The Inflation Reduction Act of 2022 invests hundreds of billions of dollars into clean energy technologies. The federal Energy Department has been busy doling that money out these past two years.Trump has said he would do away with the law.

Schwarz said the idea of the law going away strikes him as unlikely. A significant amount of money from the law has gone toward states which have voted for Republicans in recent years.

“The last thing in the world you want to do is to restart businesses every time an administration changes,” he said.

Regulatory rubs

Many recently released federal oil and gas regulations have focused on reducing methane waste and pollutionthrough restrictions, fee and greater monitoring. The heat-trapping molecule is the main component of natural gas and about 80 times more potent than CO2 over a 20-year period, according to the Massachusetts Institute of Technology Climate Portal.

The rules posespecific challenges for North Dakota, where most wells primarily produce oil, and associated gas that comes up with it is viewed economically as a byproduct. When it cannot be capturedor used on site, it is wastefully flared or burned off.

There has been large pushback from trade groups and fossil fuel-rich states, but even many opponents of the new rules still recognize flaring and other areas of methane emissions as wastes of energy that could otherwise go to use. Many at the conference pointed to some of the industry's achievements in reducing emissions outside the scope of federal regulations. A number of sessions highlighted technical solutions on how to continue doing so.

Nick Olds, executive vice president of the "lower 48" states for oil-giant ConocoPhillips, spoke to his company's efforts to completely eliminate routine flaring and other efforts to cut emissions. He did not criticize the Biden administration's policies in his speech beyond calling the pause on approvals for liquified natural gas export terminals "completely misguided," while in conversation with North Dakota Petroleum Council President Ron Ness.

Not all companies say they can handle the regulations the same, however. During a panel discussion of small-to-midsize oil companies, representatives spoke to some of the challenges they are facing in complying with the rules.

Tori Siemienewski, regulatory supervisor at Grayson Mill Energy, said bringing in more emissions monitoring measures has been difficult.

"Anyone that's implemented software in the industry, it's not cheap and it certainly takes a lot of revisions to get it right," she said.

Despite over $1 billion in funding from recent federal legislation being available to help the industry meet new methane rules, implementing some of them can still be costly especially with low prices of natural gas. Part of solving the flaring issue involves a greater buildout of gas gathering and processing infrastructure to get it to market.

Damian Paulson, production superintendent at Devon Energy, said"For Devon, the regulations that we've had to take action on so far have been expensive but manageable, but we do appreciate that for operators out there the regulations are somewhat disproportionate in effect, and certainly some regulations picking winners and losers in our industry is one (negative) thing you might see from this."

Eric Sundberg, vice president of environmental and regulatory affairs at Slawson Companies, said he is worried about a rush on equipment and outside environmental firms necessary for compliance.

"The Marathons or somebody else already has those things available to them; you know we're going to have to compete for that," he said.

'Do your duty'

While attendees spoke to an overall desire to reduce emissions, there appeared to still be a good deal of skepticism around green initiatives.

On Wednesday morning, a Theodore Roosevelt impersonator gave a speech in which he lauded the oil and gas industry and referred to environmentalists of today as "Bolsheviks" and "anarchists."

Liberty Energy CEO Chris Wright was more measured in his criticism of efforts to address climate change during a speech highlighting the dominant role that fossil fuels still play and are expected to continue to play across energy systems. He called climate change a "real and global phenomenon," but said the way it has become treated is as "a religion and a cult."

U.S. Rep. Kelly Armstrong, R-N.D., and U.S. Rep. Ryan Zinke, R-Mont., sat in conversation about politics on Tuesday with Continental Resources Senior Vice President of Government Relations Blu Hulsey. Both congressmen expressed their discontent with federal policy, anddiscussed efforts to push back if it remains the same or roll back much of it if Trump returns to the White House.

The U.S. has produced record oil output under the Biden administration, but the president has also expressed a desire and taken steps to move the country away from fossil fuels in the long term to address what he believes to be a climate crisis and what the United Nations calls a "global emergency."

Armstrong said he would "fight to the end" to keep fossil fuel development alive in North Dakota, noting the economic boon oil has brought to the state.

"When you grew up in western North Dakota, and you graduated from high school in 1995, and you have the challenges that North Dakota faces here in 2024 (after the oil boom); these challenges are a lot better than those challenges (in the '90s)," he said.

Zinke -- who ran the federal Interior Department under the Trump administration -- had a direct message for attendees.

"Do your duty to get a change in administration and this industry will thrive," he said.

Though many executive actions could be rolled back with a change in presidential administrations, Kathleen Sgamma, head of the Western Energy Alliance trade group, saidgetting policy favorable to fossil fuel companies out of Congressin the coming yearswill likely not be a cakewalk.

"It's still going to be a fairly broken political environment where it's hard to get things done because the margins in Congress are so thin, and they will continue to be thin," she said.