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Vol. 19, No. 52 Week of December 28, 2014
Providing coverage of Bakken oil and gas

The center seat

Julie Fedorchak looks to long-term needs as she takes over ND PSC chair

Maxine Herr

For Petroleum News Bakken

The newly appointed chairwoman of the North Dakota Public Service Commission will lead during a period of great change. Commissioner Julie Fedorchak will take the center seat among the three commissioners in 2015, with her own style and a focus on strategically positioning the commission for the long term needs of North Dakota. She will take a managerial role as chair, acting as the primary contact on operations, budgets and personnel issues.

Fedorchak is two years away from finishing out the last four years of the term Congressman Kevin Cramer left when he was elected to Congress in 2012. She plans to run for her own six-year term in 2016.

But first, 2015 lies ahead, and the fourth generation North Dakotan’s plate is plenty full. She said the greatest challenge facing the PSC is staffing - both for new positions likely to be funded by the upcoming legislature as well as replacing the numerous employees currently eligible for retirement.

“All of our key division heads are eligible to retire and with that is a whole bunch of wisdom that has served the state for 30 years and we need to make sure we have a plan for replacing that wisdom and having a smooth transition to the next generation of leadership,” Fedorchak told Petroleum News Bakken.

Fedorchak will look to streamline the processes within the agency such as shifting four internal divisions down to three and creating a compliance division to include rail, weights and measures, and agriculture-related licenses.

“Projects like that the public won’t likely see or notice, but it will help us use our resources more effectively,” Fedorchak said.

More inspectors needed

She said the agency has sufficient staff to oversee oil and gas transmission pipelines since it recently hired another employee to do so, but the PSC needs to hire natural gas pipeline safety inspectors to monitor the safety of those pipelines and their distribution. Gov. Jack Dalrymple also provided funding within his executive budget to allow the PSC to take over the inspection of hazardous materials infrastructure, i.e., in-state crude oil pipelines such as the one that failed and released more than 20,000 barrels of oil near Tioga in 2013. The PSC will look to hire five more people to handle the safety inspections of these two types of pipelines. But Fedorchak said the PSC is already struggling to fill a current vacancy for a gas pipeline inspector, so it will ask the legislature to be realistic about adding more duties.

“We’ll be honest with them,” Fedorchak said. “It’s all contingent upon attracting staff to do it. If we can’t find those people, we won’t start implementing the (hazardous materials pipeline inspection) program, we will just continue to manage and operate it.”

Fedorchak said the PSC’s budget also includes another staff person to monitor the accuracy of all commercial scales within the state. With growing oil and gas development in western North Dakota, she said sand, gravel and other fracking materials that are sold by weight have required more scales.

“We test those and have a quality assurance program over our private sector testers,” she added.

If the legislature allows, the commission will also supplement federal inspections of the 3,000 miles of rail throughout the state. Fedorchak said those responsibilities would necessitate another three employees.

“It’s another layer of safety and monitoring of this massive transportation system that is shipping virtually all our state’s agriculture products and a lot of the state’s oil and gas products as well,” she said.

Competing with private sector

Attracting and retaining staff is difficult since the PSC competes with the private sector that can offer much higher salaries for a similar job. But Fedorchak said the PSC’s budget includes steep salary hikes in an effort to gain the attention of potential applicants. For instance, rail inspectors’ salaries are set to match or exceed those of railroad workers because those are the people who have the expertise to make the transition the most seamlessly. In addition, the legislature has “emergency” funding in the event that the agency would need to sweeten the pot to attract an employee. The legislature also has created a retention policy in which the PSC can offer a bonus to an employee who may be enticed to leave for a significantly higher salary elsewhere.

“We can offer a bonus and have it tied to a commitment to stay,” Fedorchak said. “We are actively looking at that for the gas safety positions because we know they could probably double their salary in the private sector.”

The PSC is struggling to attract personnel to apply for its open gas pipeline inspector position even after raising the salary twice and proactively seeking out people. Once an employee is hired, the PSC also needs to be creative in retaining the staff since it runs the risk of training personnel only to have them wooed away by private industry thus causing the state to essentially lose those training dollars. Although she said the oil price drop could make an impact on industry’s plans, resulting in less competition in the employment pool.

“Hopefully we’ll have a much better sense of that in the next couple months before the legislature leaves so we can make plans accordingly,” she said.

Awaiting proposed pipeline projects

The oil price market is also expected to make an impact on pipeline projects but Fedorchak said the market has an advantageous way of weeding out the good projects from the bad. When Enterprise recently opted out of its proposed 1,200-mile, 30-inch pipeline that would have carried crude oil from the Bakken to the Midcontinent hub at Cushing, Oklahoma (see story, this page), she said it sent a message about industry needs. Since the end point for the pipeline was a saturated market and the East Coast provides a better price, Fedorchak said the lack of interest in the project likely reflected the industry’s reaction to the marketplace.

“I’m still confident the pipeline projects will move forward when they are serving a good need that the industry feels is appropriate long term,” she said.

The PSC has not been silent about its frustration with its eastern neighbors regarding the Sandpiper pipeline project that would transport crude oil from Tioga through Clearbrook, Minnesota, to an existing terminal in Superior, Wisconsin. Minnesota’s decision to allow additional hearings has delayed the project’s completion date substantially, causing great disappointment among the commission.

“There’s a shovel-ready project that is ready to go and would have a huge impact long term,” Fedorchak said. “You have to wonder with those delays, how does that affect the viability of the project?”



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