News

ND board approves bigger oil royalty rate

Details: Category: News; Created on Wednesday, 01 February 2012 14:07; Written by Justin Christianson; Hits: 531

Original Article: http://www.cbsnews.com/8301-505245_162-57367192/nd-board-approves-bigger-oil-royalty-rate/

(AP) BISMARCK, N.D. — Oil companies seeking to lease drilling rights on state land in seven western North Dakota counties should pay a larger share of their income to a trust fund that benefits schools, a state board decided Thursday.

The change will take effect during a planned Feb. 7 state Department of Trust Lands auction of drilling rights on more than 800 state tracts, covering more than 70,000 acres.

It will apply to land leased within seven of North Dakota's most prolific oil-producing counties: Billings, Divide, Dunn, Golden Valley, McKenzie, Mountrail and Williams.

Recent leases on private land in the seven counties have almost always carried a higher royalty rate than the state has been charging, said Lance Gaebe, the department's commissioner.

Public comments about raising the royalty "ranged from, 'What took you so long?' to, 'Don't you dare,'" Gaebe said.

The royalty on an oil lease is a share of the income from oil the well produces. Royalty rates on state lands in the seven counties will now be three-sixteenths of the oil's value. The present rate is one-sixth of its value.

For example, oil worth $100 now pays a royalty of $16.66. Under the new rate, it would pay $18.75, an increase of 12.5 percent.

The state Board of University and School Lands voted unanimously Thursday to endorse the higher royalty rate. Gov. Jack Dalrymple is chairman of the board, which also includes Attorney General Wayne Stenehjem, Treasurer Kelly Schmidt, Secretary of State Al Jaeger and Wayne Sanstead, the state superintendent of public instruction.

Dalrymple said he did not expect the increased rate to dampen enthusiasm for the lease sale.

Oil production in the seven affected counties has been lucrative, he said, and state leases are attractive because they bestow the right to drill for oil on the land for five years. Some private leases only allow three years for development before the land is eligible to be leased again.

"I think it was pretty clear that we need to sort of get in sync with the market out there for leases in certain counties," Dalrymple said. "We tried to be careful to not raise it in ... new areas where drilling is less certain."

The royalty income goes into North Dakota's Common Schools Trust Fund, which had $1.5 billion in assets in its most recent quarterly financial report. The agency oversees 17 trust funds in all, with assets of about $2 billion.

Money from the schools trust is distributed to North Dakota's public schools. They are slated to get $101.6 million in trust money during the next two years.

Gaebe said he could not estimate the amount of added money the trust would obtain from the higher royalty rate.

Separately, the board voted to exclude some environmentally sensitive tracts of land from the Feb. 7 lease sale after hearing pleas from the state Game and Fish Department and the North Dakota chapter of the Wildlife Society.

Thirteen tracts in Billings and Golden Valley counties are affected by the delay. The Wildlife Society said some of the land could be designated as wilderness.

"While we are supportive of the state's economic development, we do not see the need to rush forward and develop every single acre of mineral assets at this time," said Mike McEnroe, a Wildlife Society spokesman, said in a letter to Gaebe.

Scientific American

ND Senate leader: Look again at oil tax splits

Details: Category: Oil Industry News; Created on Tuesday, 31 January 2012 09:22; Written by Justin Christianson; Hits: 426

Article Source: http://www.devilslakejournal.com/news/x842391853/ND-Senate-leader-Look-again-at-oil-tax-splits

BISMARCK, N.D. (AP) — The North Dakota Senate's Republican majority leader says the Legislature needs to provide a greater share of state oil tax collections to local governments.

Rich Wardner of Dickinson is chairman of a committee that's looking into how oil tax revenues are split up.

North Dakota's oil production tax is now divided among the state and local governments.

But a number of county, city and school officials say the formula needs to be reworked to give local governments more money.

Wardner says it's clear that western North Dakota's oil boom has put a tremendous strain on local schools, roads and public works.

He says the Legislature will need to take a close look at how oil tax revenue is divided among the state and local governments.

Panel delays action on ND oil production rules

Details: Category: Oil Industry News; Created on Wednesday, 21 December 2011 14:03; Written by Justin Christianson; Hits: 446

(AP) BISMARCK, N.D. — New rules to restrict oil waste disposal were delayed Tuesday when North Dakota Gov. Jack Dalrymple said the regulations were too vague about whether some producers would be allowed to continue dumping in open pits.

The state Department of Mineral Resources had proposed rules that would mostly prohibit an oil industry practice of digging pits the size of swimming pools to temporarily dump waste from oil drilling.

Under the proposed rules, salt water, drilling lubricants and other liquid wastes from wells drilled to depths of more than 5,000 feet would have to be stored in tanks, rather than dumped in reserve pits.

Open pits could still be used for waste from wells shallower than 5,000 feet, and to dispose of rock cuttings and other solid waste from deeper wells.

Lynn Helms, director of the mineral resources agency, said most newly drilled North Dakota oil wells are deeper than 5,000 feet.

The exemption from shallower wells was proposed because their waste is usually less noxious, he said. It normally includes fresh water, rather than the brine that is a common waste product from deeper wells, he said.

The proposed rules say all open waste pits must eventually be filled in and reclaimed.

The state Industrial Commission, which regulates North Dakota's oil and gas industry, delayed action on the proposed rules Tuesday after Dalrymple told Helms they did not provide enough regulatory guidance to oil producers.

The proposed rules allowed oil producers to ask Helms and the Industrial Commission for permission to use pits for disposing of wastes from deeper wells.

"For everybody drilling below 5,000 feet, they still don't know where they are on that. They really can't assume anything," Dalrymple said to Helms. "You may, in your mind, have a clear idea of where you're going with this, but how are we going to get that same clarity if it can't even be reduced to words?"

Helms said afterward the proposed exemption for wells deeper than 5,000 feet would have to be "refined."

"They want some more restrictive language there to define under what circumstances can you (ask for an exemption)," Helms said.

The Industrial Commission will take up the issue again in mid-January. Dalrymple is chairman of the commission, which regulates North Dakota's oil and gas industry. Its other members are Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring.

The rules also require oil companies to disclose chemicals they use for hydraulic fracturing, a process during which water, chemicals and grit are pumped underground to break up shale rock and allow the oil to flow.

They say companies must list chemicals in their "fracking" fluid on a website that is accessible to the public. The components of fluids used for individual oil wells will be listed, Helms said.

The oil industry's waste disposal pits have come under scrutiny after heavy water runoff from melting snow last spring caused some to overflow, polluting nearby farmland.

Some oil companies also have been charged under a federal law that protects migratory birds after some ducks and other birds were discovered dead in waste pits. The birds had apparently mistaken the pits for a good landing spot.

Some oil companies, in comments filed about the proposed rules, said the ban on waste pits for deeper wells would drive up drilling costs by $50,000 to $400,000 per well, and make some exploration projects uneconomical.

Article Source:

http://www.cbsnews.com/8301-505245_162-57346554/panel-delays-action-on-nd-oil-production-rules/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed28GameCore29

Census: ND population at record high

Details: Category: Oil Industry News; Created on Wednesday, 21 December 2011 14:08; Written by Justin Christianson; Hits: 432

(12-21) 08:47 PST Bismarck, N.D. (AP) --

U.S. census data released Wednesday shows that North Dakota's population is at an all-time high, surpassing the previous record set more than 80 years ago.

The Census Bureau's data shows North Dakota's population is pegged at 683,932 residents. That's up from the previous record of 680,845 residents set in 1930.

Gov. Jack Dalrymple says he welcomes the growth in North Dakota which had suffered decades of population decline. North Dakota's strong economy led by its booming oil patch has attracted thousands of new residents in the past few years.

The state's population has increased by 50,000 residents from a decade low of 632, 809 reported in 2003.

North Dakota's recent population estimate shows an increase of more than 11,300 people in the past year.

Source:

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/12/21/financial/f084712S48.DTL

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