North Dakota's strict new standards for oil treatment, requiring every barrel of crude be filtered for dangerous types of natural gas, should add 10 cents to the cost of producing every barrel, regulators said on Friday.
That's roughly $3.7 million per month, statewide, based on October's monthly oil production of 36.6 million barrels. The new standards take effect in April.
The ongoing cost would be in addition to one-time capital investments of $20 million needed statewide, an average of roughly $2,500 per well in the state's Bakken and Three Forks shale oil formations, said Lynn Helms, head of the state's Department of Mineral Resources.
The one-time costs would be for oil producers who do not have adequate vapor-recovery equipment at well sites or oil collection points. Such devices, which can service production from many wells, cost around $50,000, Helms said.
Not all producers will need to spend money to upgrade their equipment. The new standards are designed to produce crude oil with vapor pressure no greater than 13.7 pounds per square inch. Some producers lack equipment to achieve that goal, necessitating the outlay.
In enacting the new standards, designed to improve the safety of crude-by rail transport, state officials opted for cheaper options than others were advocating, an attempt to partially save the industry costs.
Asked about the projections from Helms, the North Dakota Petroleum Council, an industry trade group, said it is too early to determine how much the new standards would cost. (Reporting By Ernest Scheyder; Editing by Terry Wade)