Flared gas and your royalty in North Dakota

What the statute allows

Gas comes up with the oil, and when there's no pipeline or plant to take it, operators burn it off. State law limits how long that can go on. Under NDCC 38-08-06.4, and as the Industrial Commission's rules permit, gas produced with oil from an oil well may be flared for one year from the date of first production.^[1]

After that year the flaring has to stop, and the well has to be:^[1]

• Capped, or
• Connected to a gas gathering line, or
• Equipped with an electrical generator that uses at least 75% of the well's gas, or
• Equipped with a system that takes in at least 75% of the gas and natural gas liquids for a beneficial use. The statute lists compression for fuel, transport to a processing facility, petrochemicals or fertilizer, conversion to liquid fuels, and collecting over 50% of the propane and heavier hydrocarbons, or
• Equipped with another value-added process the Commission approves that cuts the volume or intensity of the flare by more than 60%.

When royalties are owed on flared gas

This is the part owners care about. The statute says that for a well operated in violation of the section, the producer shall pay royalties to royalty owners on the value of the flared gas, and shall also pay gross production tax on it.^[1] So a well that keeps flaring past the year, without a legal way out, owes you royalty on gas it burned.

The Industrial Commission enforces the section. It can decide the value of the flared gas for royalty purposes, and the statute says its determination is final.^[1] The Commission's rules add that the value is set after notice and hearing.^[2]

Notice what the statute doesn't say. It spells out royalties for flaring in violation. It doesn't say what you're owed on gas that was flared inside the first year or under an exemption. Royalties in North Dakota are governed by contract law, which in practice means the lease you signed, so the gas royalty clause in your lease is where that answer lives. We cover those clauses in our guides to lease bonus and royalty and royalty check deductions.

Exemptions and how they're decided

A producer can ask the Commission for an exemption. The statute lets it grant one when connecting the well to a gas line is economically infeasible now or in the foreseeable future, or no market for the gas is available, and a generator or a collection system would also be economically infeasible.^[1]

The rules put a number test on “economically infeasible.” Connecting is infeasible if the direct costs of connecting the well and operating the connection over the life of the well are greater than what the operator would likely receive for the gas, after production taxes and royalties. The applicant may add 10% to its costs for the cost of money and overhead.^[2] It also has to present, at the least, the gas price it used, the connection costs, the current daily rate flared, the gas reserves and gas available for sale, and documents showing a generator and a collection system aren't feasible either.^[2]

You get a say. These applications are advertised and scheduled for hearing like any other, and the rules let any interested party appear to oppose or comment. You can also send written comments or objections, as long as they arrive by 5 p.m. on the last business day before the hearing.^[2] Flaring requests do show up on the docket. The Commission's March 26, 2026 docket, for example, lists applications to allow flaring from current and future wells in particular pools as an exception to a Commission order.^[3] Our NDIC news page tracks the daily reports, and the Commission's docket index lists each hearing.

How much gets flared now

The Commission has set statewide gas capture goals that rose over the years, and the current one is 91% beginning November 1, 2020.^[4] In the Department of Mineral Resources' October 2026 Director's Cut, covering August production, statewide gas capture was 95.8% and Bakken capture was 96.1%. The statewide flared volume fell by 17.9 MMCF a day from July to 155.4 MMCF a day.^[4]

Those are statewide numbers. They tell you the industry is capturing most of its gas, but nothing about the well on your tract. For that you need the well's own record.

How to check a well on your land

Start with the well's first-production date, which you can find in the Division's well records. Add one year. If gas is still being flared after that, ask the operator's owner relations office whether the well has an exemption or another arrangement. Write down who you talked to and when.

The operator has to report all gas produced to the Division each month, and gas used on the lease or flared can be estimated or measured and is reported on a gas report.^[2] The Division's records are public, and some of its data is behind a subscription. Our spacing units and pooling guide shows where to look up a well and its orders.

Then look at your stub. Under NDCC 38-08-06.3 the payment statement has to let you identify the amount of oil or gas sold and each deduction.^[5] That statement is built around what was sold, so don't expect it to tell you how much gas was flared. If the well's reports show large volumes flared long past the first year, and you can't find an exemption, that's a fair question to put to the operator in writing.

Montana

Montana has its own rule. MSU Extension's MontGuide says Montana limits flaring to 60 days after completion, and that a royalty owner whose gas is flared past that should contact the operator.^[6] Our guide to Montana royalty payment law covers the payment side.

A note on our interest

Fort Union buys minerals and royalty interests, so we have a commercial interest in this subject. Nothing in this guide depends on selling to us, and each statement comes from a public source listed below. Our editorial standards explain how we source and review our pages. If you ever want to know what we'd pay for your interest, the offer page is the way to reach us.

Sources

These are the sources behind this guide, in the order we first cite them. We read each of these on October 29 and November 2, 2026.

1. N.D.C.C. section 38-08-06.4, flaring of gas restricted — North Dakota Legislative Branch, Century Code chapter 38-08, read October 29, 2026 and again November 2, 2026.
2. N.D.A.C. sections 43-02-03-44, 43-02-03-60.1, 43-02-03-60.2 and 43-02-03-88.1 (flaring, valuation, exemption, hearing procedure) — North Dakota Legislative Branch (Administrative Code), chapter 43-02-03, read October 29, 2026 and again November 2, 2026.
3. Industrial Commission hearing docket for March 26, 2026 — North Dakota Industrial Commission, Oil and Gas Division, docket read November 2, 2026.
4. Director's Cut, October 2026 (August production), gas capture slide — North Dakota Department of Mineral Resources, published October 20, 2026, read November 2, 2026.
5. N.D.C.C. section 38-08-06.3, information statement to accompany payment to royalty owner — North Dakota Legislative Branch, Century Code chapter 38-08, read October 25, 2026.
6. Owning Leased Oil and Gas Minerals (MontGuide) — Montana State University Extension, read November 2, 2026.