The first decision of Wayne Stenehjem’s soon-to-be-officially announced campaign for North Dakota Governor comes today, when the three-person Industrial Commission, of which he is a member, decides to give the Oil Industry a big wet kiss on the lips or a tiny slap on the hands.
At issue is whether the commission will stick to its guns and enforce its policy of restricting the amount of natural gas that can be flared at the wellhead or whether they will give the industry a reprieve and let it flare as much as it wants.
Stenehjem’s vote on the matter may well determine whether he has industry support in his expected 2016 governor’s race. Translated, that means campaign cash from oil executives and industry PACs, something he’s seen little of in past campaigns. Translated further, it may well mean the difference between being elected governor or not.
That’s because the oil industry wants a governor of its own.
That was clear in the last governor’s race, when the Oil Boys ponied up more than $600,000 for Jack Dalrymple, which was more than the total of all contributions raised by Dalrymple’s opponent, Ryan Taylor.
Taken further, Stenehjem’s vote could decide whether the powerful industry, which holds much sway in the Republican Party, will go looking for a candidate of its own to challenge Stenehjem at a state convention or primary election.
Here’s the problem. In its haste to pull every drop of oil it can reach out of the ground, hence collecting every dollar it can from that oil, the industry began flaring off the natural gas that comes up with the oil instead of capturing it and selling it as a byproduct of oil production. The industry did that because oil was worth so much, and the gas worth so little, it could make more money by just burning the gas instead of finding a market for it. The oil boys burned so much gas that it actually got to be an embarrassment for even our swooning North Dakota regulators, complete with satellite pictures that appeared all over the world showing North Dakota’s night sky lit up like downtown Chicago.
The flaring created several problems beyond a public relations nightmare. First, studies began to show that the noise and light pollution was affecting the wildlife population. Nocturnal critters couldn’t find darkness any more, and they couldn’t hear each other over the roar of the fire. Second, mineral owners were getting screwed out of the royalties they should have been collecting from the sale of the gas, so it wasn’t just oil company money going up in smoke, it was farmers, ranchers and the state and federal governments who were losing money. Third, flaring was polluting the air. And fourth, it was wasting a valuable source of energy — the flaring was burning enough gas to heat millions of American homes.
So finally, last year, in response to public pressure, the Industrial Commission and the oil industry came up with a set of goals to reduce flaring. They were meeting them, too, until the price of oil tanked and the construction of processing and distribution facilities ground to a near halt. With no place to put the gas, the oil boys just kept on flaring, and now they are not going to be able to meet the goals they agreed to just a year ago.
So, they’re asking Dalrymple, Stenehjem and Agriculture Commissioner Douglas Goehring to extend the deadline for meeting those goals by two years. That’s what today’s vote is all about.
If the goals were onerous, a delay might be worth considering. But they’re not. The deadline for getting flaring down to 15 percent of the gas produced by Jan. 1 of next year is still pretty generous, considering that the national average for percentage of gas flared is just 1 percent.
The 15 percent goal is not hard to meet. All that has to happen is something that should have happened five years ago: Don’t bring any new wells online until the goal is met. If that means a moratorium on new drilling permits, so be it. If it means completed wells cannot become operational, then that’s what should happen.
So, Stenehjem faces his first critical decision of the 2016 campaign for governor of North Dakota. Does he want the support, accompanied by campaign cash, of the oil industry, or does he want to appeal to North Dakotans who have applauded the state’s efforts to begin flaring reduction, and who might vote for him for governor if he votes to hold the industry to their own suggested deadline.
As I mentioned earlier, he’s not been a big recipient of oil industry money. That’s partly because he pissed off the oil industry last year with his proposal to put certain “extraordinary places” off limits to drilling and partly because he hasn’t needed it. In his 2014 re-election race, his campaign was funded mostly by the Republican State Leadership Committee and a lot of political action committees with loose ties to North Dakota. The RSLC wrote the biggest check ever given to a North Dakota politician — $150,000.
The RSLC is a national Republican fundraising organization that collects corporate dollars, washes them through its PAC and hands them out to state candidates like Stenehjem, whose state specifically prohibits corporate contributions to political campaigns.
In the past, Stenehjem has claimed that he’s only getting funds from the noncorporate donors to the funds, but the RSLC makes no visible effort to actually isolate noncorporate dollars for candidates in states that prohibit corporate contributions. In fact, most states prohibit corporate contributions, so even though the bulk of the $35 million the RSLC raised in 2014 was from corporations, almost all the candidates claimed to receive their funds from that small percentage of noncorporate funds. Kind of a “loaves and fishes” miracle, it appears to me.
Be that as it may, today’s vote may mean more than just oil industry financial support. It might also mean the difference between a cakewalk to the GOP nomination or a drawn-out battle against a candidate the industry prefers. Like state senator and current Republican Party Chairman Kelly Armstrong, whose father, Mike, is one of western North Dakota’s richest men (oil) and a huge Republican donor.
Lastly, there’s the Doug Burgum problem. Given the results of a recent poll that showed North Dakotans, even Republicans, could be convinced to vote for the right kind of independent candidate, Burgum’s been making noises like a candidate. If Stenehjem is indeed the anointed Republican, and if Burgum gets in as an independent, Stenehjem is going to need a lot of money. A lot.
All those things factor into today’s vote. We’ll be watching.