Oil price discounts caused by a shortage of pipeline space probably cost North Dakota's treasury more than $14 million from December through April, a state oil regulator says.

Lynn Helms, director of the state Department of Mineral Resources, said state officials and North Dakota's oil industry are working to increase pipeline capacity, and take other steps to ensure the situation does not repeat itself.

"My concern is getting things in place so that every winter, this doesn't come back to haunt us," Helms told the Legislature's interim Budget Section on Wednesday. He said the price situation has largely returned to normal.

North Dakota's oil producers, who have been enjoying high world prices, began getting hit with discounts late last year, mostly because of competition for pipeline space with heavy Canadian crude oil that was being shipped south. The discounts ranged from $5 to $25 a barrel.

During the summer, the oil is used for road construction and making asphalt. In the winter, Helms said, producers were willing to sell it more cheaply than higher-quality North Dakota crude. Many North Dakota producers had to accept lower prices as a result, Helms said.

The problem was intensified by fires at Colorado refineries where production from Bowman and Slope counties, in North Dakota's southwestern corner, is normally shipped to be refined.

The state Tax Department estimated the difference in taxes paid from the price fetched by North Dakota oil and the price at the New York Mercantile Exchange. It added up to $14.4 million over five months, Helms said.

Rep. Bob Skarphol, R-Tioga, asked if the discounts had been passed along to customers in lower fuel prices. No, Helms replied.

"That money went into the pockets of purchasers, transporters and refineries," Helms said.

State officials and lawmakers are examining a number of proposed solutions to the problem, including a state agency to encourage pipeline construction, capacity additions to existing pipelines, and quality standards for oil transported in pipelines.

Expanding North Dakota's refinery capacity is another option, but it would require a way to export the refined petroleum products, Helms said.

The Budget Section is an interim legislative committee, which includes the Legislature's Democratic and Republican floor leaders, and members of the House and Senate budget-writing committees.