State regulators are finding out that a rule created to make oil sites more environmentally friendly is creating a make or break situation for drilling in certain areas.
In fact, eliminating reserve pits may be influencing some companies to consider drilling in South Dakota instead.
Bowman county used to be the hotspot for oil in North Dakota.
It was the number one producer for years.
In fact it slid from the top spot in July 2008, falling behind Mountail County, just after the oil industry figured out how to crack the Bakken.
Since then production in Bowman County has decreased.
"Bowman County has pretty much been asleep for a year and a half," says Director of Mineral Resources Lynn Helms.
No rigs are drilling in Bowman County today, but three were there recently.
Helms says he expects that number to pick up.
"That's in response to the industrial commission loosening the rules a little bit on reserve pits," says Helms.
In April 2012, the state Industrial Commission approved new rules to eliminate reserve pits at rig sites.
The pits were used to hold drilling mud, chemicals and diesel fuel used in the drilling process.
The new rule adds to the expense of drilling a well... Most major companies can make up some of the cost in savings gained in the reclamation of a site.
But Helms says for the companies operating a few rigs in remote areas, the cost can break a deal.
"The net can be $300,000 more in costs. If you add that to a 3.5 million well that had marginal economics anyway makes for a no drill decision."
Which is why the Industrial Commission has made exceptions to the "no reserve pit" rule to Luff Exploration and Continental Resources in Bowman County.
Not only does bending the rules make it more economical for oil companies to drill here... It is also has to deal with competition.
Just a stone's throw away from the Bowman County rig is the South Dakota border where reserve pits are allowed.
Helms says, "If you want oil activity in Golden Valley, Bowman, Adams or Hettinger, that's what going to have to do. It's designed to help the edge counties.
According to the South Dakota Department of Environment and Natural Resources, there is only one rig currently drilling in South Dakota at this time, which is in Harding County just south of Bowman.
Here's some information about oil activity in our neighbor to the south.
They have had 19 oil wells drilled so far this year with a majority of them in Harding County.
South Dakota produces 1.6 million barrels of oil a year, which is what North Dakota produces in two days.
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