April 12, 2019 -- Battle of the Seasons
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The sun tries to break through the clouds as early spring snowflakes fall on the Capitol.
A late winter storm dropped more than a foot of snow on parts of the Dakotas this week.
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Williston School Boards Meet at Capitol
Governor Encourages “Extreme Collaboration”
In what may be the first meeting of its kind in state history, the boards of the two largest school districts in Williams County met at the State Capitol today to try to work out boundary differences and tax and revenue inequities that challenge both districts.
The boards of Williston District #1 and Williams County District #8 were invited to discuss the situation with Governor Doug Burgum and the State Board of Public Education. Both districts are struggling to cope with rapidly increasing enrollments related to growing oil industry activity. A bond issue to expand Williston High School and add two new elementaries was narrowly defeated this week in Williston #1 (see story below), and Williams #8 is seeking voter approval of a similar plan in a
bond vote May 14.
Williston #1 Board President Joanna Baltes said the district’s property tax base is small and is landlocked by surrounding District #8, so the bond issue would have required a large increase in property taxes. Baltes said the state Foundation Aid funding formula does not work for the district because it deducts 75% of the value of the oil tax revenue it receives from its state aid payment. She said it leaves the district woefully short of funds, which is magnified by the high cost of living in Williston.
Click
here to listen to Baltes’ comments.
Senator Brad Bekkedahl, R-Williston, said the school district is an anomaly “headed for disaster,” because of funding inequities. Bekkedahl said the state’s gross production tax on oil was intended to offset the impacts of school districts, but the deduction in the state funding formula denies that assistance. He said the state has done a good job of addressing industry-driven infrastructure needs of other political subdivisions, but the needs of schools have gone unmet.
Click
here to listen to Bekkedahl’s comments.
Several other state legislators attended the meeting, including Senator David Rust, R-Tioga. Rust offered bills this session that would have provided a direct grant to rapidly growing districts, and allowed them to keep more oil tax revenue, but both failed. He said the state should consider direct grants to oil-impacted districts because they were provided to districts when the state’s coal industry surged in the 1980s.
Click
here to listen to Rust’s comments.
Members from both school boards described meetings they’ve had to try to come up with a mutual “master plan” to address needs in the county. Governor Burgum encouraged the boards to continue their collaborative effort. Burgum said he recognizes the importance of a quality education system to attract workforce, and that Williston’s problem is also the state’s problem.
Click
here to listen to Burgum’s comments.
Burgum signed into law this week two bills that encourage collaboration.
HB 1125 would allow a cooperative plan between districts with taxable property located in the same city, and
HB 1434 could facilitate the merger of adjoining school districts.
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Mayor Klug: “It’s Just Us and Us”
Williston Mayor Howard Klug said the two school districts that serve the community have to figure out how work to together to improve conditions in the school system.
“It’s just us and us,” Klug said, speaking near the end of a meeting of the Williston #1 and Williams County #8 school boards at the state Capitol. He cited the countywide public safety sales tax as an example of a cooperative effort that can benefit everyone.
“We’re building fire stations, we’re building new stations in all the surrounding communities. We’re making your students safer by working together,” he said. Klug said members of the boards need to set aside any parochial differences they have and work for the benefit of the kids.
“It’s not who’s in charge, how much local control you need to hang onto,” Klug said. “It’s working together, so let’s get this figured out.”
Klug was accompanied by former longtime Williams County Commissioner Dan Kalil, whose son Tom is vice-president of the Williston #1 School Board. Kalil said it was essential that the two districts work together to achieve a solution.
“If you want to get a bond issue passed, you have to work together,” Kalil said. “District #1 and District #8, if you can stand in front of the voters in our community and say 'there are efficiencies to be gained by building schools together,' you’ll get your bond issues passed.”
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Williston #1 School Bond Vote Fails
The vote in Williston was close again, but not enough to pass a $60 million bond issue for construction of two new elementary schools and an addition to Williston High School.
The measure which required 60 percent support for passage, received 57.6 percent of the vote. A separate measure on the April 9 ballot to allow the district's building fund to increase from 10 mills to 20 mills also fell short, receiving 58.2 percent of the vote.
Williston Superintendent Jeff Thake said in terms of numbers, the bond fell just 86 votes short of passage. Thake said it’s encouraging to know the majority of the citizens are supportive of the schools. He said the district will continue to examine its options to relieve overcrowding in the district.
Click
here for more details from the Williston Herald or
here for a story from KEYZ Radio.
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Frigid February Causes Oil Production Drop
Helms Calls Weather Impacts a Case of "Frostbite"
Weather impacts in February stalled the steady growth of oil and natural gas production in North Dakota. In his monthly “Director’s Cut,” Department of Mineral Resources Director Lynn Helms reported on production for February saying the industry got "a bad case of frostbite" in the bitterly cold month.
February oil production came in at 1,335,064 barrels a day, down 5% from January’s production of 1,403,808 bbl/day. Similarly, natural gas production was down 3% to 2.63 billion cubic feet a day from January production of 2.72 bcf/day.
Click
here to listen to a production summary from Helms.
Volumes of natural gas captured statewide also struggled with the daily amount captured down 4%.
“We are certainly moving in the wrong direction there,” Helms said. “There’s a lot of infrastructure either being built or planned for this summer so I think that’s going to turn around by year-end 2019 but it’s not going to turn around in the immediate near-term future.”
The number of well completions dropped significantly in February to 59 after being relatively stable in December and January with 113 and 92 respectively. “You would expect that, with the severe cold weather we had where it’s very difficult to move and heat frack water for well completions.”
Helms said the industry is now back to nearly 900 wells waiting completion right now.
Regarding oil and natural gas prices, Helms reported that oil prices are strong but natural gas is “cheap.” Click
here for his comments on prices.
Helms addressed a threat the North Dakota industry is facing from the West Coast where the Washington Legislature has a bill that would impose a very restrictive vapor pressure limit on crude oil being offloaded from rail cars. Helms had traveled to Olympia, WA, in March to testify in opposition to the legislation.
Click
here for Helms' comments on the rail issue. Click
here for the full Director’s Cut report.
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Oil Industry Analyst Expects $70 WTI Price
Crude oil producers in the United States can expect to see prices top $70.00 per barrel in the second half of this year.
That’s the prediction of Michael Filloon, co-founder and managing director at Hartstreet LLC. Crude future prices have climbed the past few months, with Brent and the West Texas Intermediate (WTI) index both increasing more than 20 percent since the start of 2019.
Filloon said the increase is driven by a combination of market factors, including US sanctions on Iran and Venezuela, Saudi production cuts, and the anticipated increase in demand as the summer driving season approaches. During an opening monologue on the radio program,
Energy Matters, Filloon said the market changes are good news for North Dakota oil producers.
Click
here to listen to Filloon’s comments.
Filloon said another market factor helping North Dakota is a drop in Canadian production, which he said is largely attributable to unfavorable environmental and regulatory policies in the country.
Click
here and advance to the 1:45 mark to listen to Filloon’s commentary on the oil market.
Click
here to read more on oil markets from CNBC, or
here to read an article in Oil & Gas Journal about EIA’s upward price forecast.
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Burgum Budget Section Veto Squashed
House and Senate Override by a Wide Margin
Gov. Doug Burgum's veto of
SB 2055, a bill that would create a legislative Budget Section comprised of 42 House and Senate legislators, was overridden by the legislature this week.
The Budget Section proposed in the bill would meet between sessions to review and approve or reject certain expenditures. The bill outlines the membership of the Budget Section and sets new criteria for approving expenditure requests.
In the his
veto message, Burgum referred to a dispute last year pertaining to the separation of powers between the legislative and executive branches that was heard by the ND Supreme Court. He said the Court ruled that the legislative assembly "may not delegate to another body the power to make law - to legislate." Further, Burgum said “the Constitution grants the legislative body the authority to create law and appropriate funds. These duties cannot be delegated to a subset of legislators, such as the budget section, which consists of 42 of the legislature's 141 members.”
Gov. Burgum was a guest this week on the radio show
“What’s On Your Mind” and discussed his veto.
Click
here for his comments.
On Thursday, the Senate voted unanimously 47-0 to override the veto and requested the measure be “immediately messaged to the House.” Sen. David Hogue, R-Minot, an attorney, summarized the Senate’s position outlining a different interpretation of the Supreme Court decision.
Click
here for his comments.
The House took up the veto first thing this morning and followed the Senate's lead by overriding the veto on an 89-3 vote. Majority Leader Chet Pollert, R-Carrington, said the Supreme Court's decision left the legislature with four alternatives, one of which was the legislation it passed.
Click
here to listen to Pollert's comments.
Click
here for a Bismarck Tribune article with comments from Burgum on the veto override.
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Conf. Committee Okays Pore Space Bill
A legislative conference committee today approved an amended version of a bill intended to address uncertainties over use of underground pore space.
The
new version of
SB 2344 deletes all references to storage of produced natural gas, a practice which has not yet occurred, but is under consideration. References to gas storage in the original bill raised questions among landowners whether the legislation could take away rights to future compensation if gas storage does occur.
The primary purpose of the bill was to remove uncertainty created by a 2017 North Dakota Supreme Court decision that looked at separate sections of state law, and concluded they could be interpreted to require compensation for produced water injected back into a production unit. The decision created a “terrifying” prospect for disposal well operators, who feared the court’s interpretation could require they compensate adjoining landowners, rather than just the surface owner on whose property the well is located.
The legislation is also intended to clarify that companies planning to inject carbon dioxide into oil-bearing formations to stimulate additional production are not obligated to compensate the landowners for use of pore space. The provision is especially important to Bowman County, where Denbury Resources is developing an enhanced oil recovery project.
The bill now returns to the Senate, and if its members agree with the changes, it will move to the House for its approval.
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Income Tax Relief Proposal Resurrected
Legacy Fund Buydown Attached to Tax Budget
A proposal to use earnings from the state Legacy Fund to reduce personal and corporate income taxes came back to life Wednesday in an amendment attached to the budget bill of the state Tax Commission.
The House originally passed
HB 1530 in mid-February by a 61-31 vote, but was soundly defeated 41-4 by the Senate in mid-March. WDEA reported on the House action in its
February 15 newsletter and on the Senate’s defeat of the bill in the
March 22 newsletter.
The concept of using Legacy Fund earnings to reduce income taxes was attached to
SB 2006, the bill authorizing the budget for the Office of the State Tax Commissioner. During House floor debate on the measure, Minority Leader Josh Boschee, D-Fargo, spoke against the measure saying the state has a number of unfunded priorities where revenue is needed.
Click
here to listen to Boschee's comments.
Speaking in favor of the amendment, Rep. Craig Headland, R-Montpelier, the bill's original sponsor, said the three-legged stool of taxation doesn’t stand now since income taxes “out of whack.” Headland, who chairs the House Finance and Taxation Committee, said it's time for state residents to benefit from the oil industry’s tax revenues.
Click
here to listen to Headland's comments.
The bill now returns to the Senate, which is unlikely to agree to the House action.
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House Passes Constitutional Amendment
Resolution Would Require Legislature's Input
It’s possible the next time an initiated measure to amend the ND Constitution is passed by the voters, it would need to be considered by the legislature prior to enactment.
That's concept in
SCR 4001 passed by the House this week on a 63-30 vote. If voters approve an amendment to the state constitution, it would come to the legislature for its review. If lawmakers approve, it would become part of the constitution. If the legislature didn't approve, the measure would go back on the ballot again. If voters approved again, it would become effective. Language in the measure would also require that constitutional amendments are only submitted to voters on the general election ballot.
Rep. Scott Louser, R-Minot, said the constitution can only be changed by a vote of the people, but he said the process has been subverted in recent years. Louser cited examples of professional, well-funded campaigns by out-of-state groups that have been effective in persuading voters to change the constitution.
Click
here for Louser's comments.
Rep. Mary Schneider, D-Fargo, said she thought the measure could be viewed as “retaliation or a retribution for the successful constitutional amendment that we had that put an ethics amendment for the legislature in our constitution.” Rep. Pamela Anderson, D-Fargo, also noted that efforts to amend the constitution have more often come from the legislators themselves than from voters.
Click
here to listen to Anderson's comments.
The resolution, since it amends the constitution, would require voter approval in 2020. Click
here for additional details in an article from the Fargo Forum.
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Compromise Proposed for Women’s Prison
In Gov. Burgum’s budget address in December, he announced a plan to move female inmates out of a correctional facility in New England to the Missouri River Correctional Center near Bismarck. Burgum also proposed to move low-risk male inmates to the State Hospital in Jamestown.
This week, the Senate passed the budget of the Department of Corrections and Rehabilitation with funding to keep the facility operational and house either male or female inmates at the location during the 2019-21 biennium.
HB 1015 requires the Governor to consult with DOCR leadership to determine the gender to be housed at the facility.
Sen. Terry Wanzek, R-Jamestown, spoke about the bill's “hybrid” plan that outlines a series of options that Burgum and correctional officials could consider that would help find the best way to make efficient use of existing correctional facilities in the state.
Click
here for comments from Wanzek.
The budget bill contains $11.9 million to house inmates in New England, whether they're women or men. The bill also provides funding for enhanced education and workforce development opportunities for inmates nearing release that could be an opportunity for the New England facility going forward.
The budget bill now returns to the House for its consideration of Senate amendments.
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Enchanted Highway Seeks Legislature's Help
Appropriation Sought to Maintain Seven Sculptures
The creator of the sculptures along North Dakota's "Enchanted Highway" between Gladstone and Regent is seeking the state's help to keep the artwork from falling into disrepair.
The string of giant outdoor art begins with the 110-foot-high "Geese in Flight" sculpture at Exit 72 on Interstate 94. The 30-mile stretch of road also includes a giant grasshopper, a pair of giant pheasants, a stagecoach and more.
The budget of the state Tourism Department, which is part of
HB 1018, the appropriation bill of the Department of Commerce, currently contains a $250,000 line item to help maintain the sculptures. The bill would require a dollar-for-dollar private sector match.
Sculptor Gary Greff said he can't afford to maintain the
tourist attraction, and would dismantle the sculptures rather than allow their condition to deteriorate.
Click
here to listen to Greff's comments.
Greff's creative artistry isn't finished. He is working on another sculpture off the highway near the hotel and gift shop he owns in Regent.
Click
here for more comments from Greff.
The Commerce Department funding bill was approved Thursday in the Senate Appropriations Committee, and will be debated on the Senate floor next week.
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McKenzie County Flood Relief
Funds have been set up to assist families in McKenzie County that have been displaced by flood waters from rapid spring snow melt and ice jams.
North Dakota Community Foundation set up a Disaster Response Fund to help flood victims. Money donated to this fund will be used to give grants to agencies assisting individuals affected. Click
here
to make your donation.
Lutheran Social Services has set up a Flooding Disaster Relief portal to accept donations. Click
here
to access this fund.
In addition, First International Bank & Trust in Watford City has established an account for flood-stricken families. To donate, go to a branch office of the bank
near you
or send your donation to:
First International Bank & Trust
P.O. Box 607
Watford City, ND 58854
Attention: McKenzie County Flood Recovery
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President Trump Issues Executive Orders
Promotes Infrastructure and Efficient Permitting
President Trump issued two Executive Orders this week supporting energy development in the U.S., both of which are positive developments for North Dakota oil and natural gas production.
The
Executive Order on promoting energy infrastructure promotes private investment through an efficient permitting process and encourages a single point of accountability while avoiding duplicative studies and reviews. The order enables construction of energy-related infrastructure and says the Federal Government must “promote efficient permitting processes and reduce regulatory uncertainties that currently make energy infrastructure projects expensive and that discourage new investment.”
The order also directs the Environmental Protection Agency to review the guidance for Section 401 of the Clean Water Act, which governs what state agencies should review in submitted applications for water quality permits. The Executive Order puts a timeline on the EPA Administrator’s review as well as the issuance of new guidance.
The
Executive Order on the issuance of permits states that Presidents have long exercised authority to permit or deny infrastructure projects at the US border, but over several decades of bureaucratic actions, the process has become unnecessarily complicated. The new Executive Order revises the process for the development and issuance of Presidential permits covering the construction and maintenance of certain facilities and land transportation crossings at international boundaries of the United States.
Governor Burgum tweeted a message Friday afternoon on the President's actions saying "Grateful for action by
@realDonaldTrump to streamline permitting of essential energy infrastructure and ensure market access, allowing export states like ND to support U.S. energy dominance while protecting our clean air, water and land."
The oil and gas industry also welcomed the orders. “North Dakota is making a significant contribution to overall oil and natural gas production in the United States,” said Ron Ness, president of the ND Petroleum Council in a news release.
“Our country has out-produced every other nation in the world each month in 2018 and 2019. But we need regulatory certainty and the infrastructure capacity for this record production to benefit American consumers across the country. These Executive Orders are a good first step to removing some of the regulatory hurdles we’ve been facing and allowing significant infrastructure projects to move forward on a more predictable timeline.”
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WDEA Offering Energy Scholarships
The Western Dakota Energy Association will award five $1,000 scholarships this fall to students in an energy-related field at a North Dakota college, university or technical school.
WDEA President Gary Wilz said the association is offering the scholarships to help the industry and western communities meet the workforce challenges now being experienced with the surge in oil industry activity.
“We recognize that North Dakota will see benefits from higher oil prices only if the industry is able to attract the workforce it needs,” said Wilz, who is Superintendent of the Killdeer Public School District. “We want to do everything we can to encourage young people to explore the many opportunities for a rewarding career in the energy industry.”
Funding for the scholarship program is generated by sponsorships of WDEA’s annual meeting, as well as royalties from advertising in Basin Bits magazine.
Click
here to learn more about the selection criteria and how to apply.
Click
here to view or download an application form.
The application deadline is August 31, 2019. Scholarships will be awarded in September.
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Quick Connect
- Governor Burgum signs bill addressing oil tax allocations -- Fargo Forum
- Chancellor tells UND Prez Kennedy, 'I accept your resignation' -- KFGO Radio
- Burgum signs numerous bills including pipeline tampering -- KFYR-TV
- North Dakota House passes trespassing and posting bill with major changes -- Fargo Forum
- ND House committee rejects major changes on Medicaid expansion -- Fargo Forum
- Minot airline boardings take off in 2019, nearly 40,000 boardings in 1Q -- Minot Daily News
- Theodore Roosevelt Presidential Library gets backing from Senate committee -- Fargo Forum
- Economic Development explains why attracting new retail can be complicated -- Williston Herald
- ND's new vapor pressure rules prompting more tests, faster enforcement -- Williston Herald
- ND Legislature continues prison reform push but with fiscal concerns -- Minot Daily News
- U.S. oil production grew 17% in 2018, surpassing previous record in 1970 -- Today In Energy
- North Dakota House seeks to nix higher raises for ag commissioner, treasurer -- Fargo Forum
- Trump’s order would make it harder for green activists to block pipelines -- Associated Press
- Housing and Urban Development Secretary Ben Carson to visit North Dakota -- KFYR-TV
- Forum Communications names Bob Carruth publisher of the Dickinson Press -- Dickinson Press
- Bowman County School District names Wayne Heckaman new superintendent - Bowman Extra
- Williston High School Job Fair attracts more than 200 job seekers -- Williston Herald
- The biggest Saudi Arabian oil field is fading faster than anyone guessed -- Bloomberg
- Rail rules likely to increase crude vessel imports into Puget Sound: analysts -- S&P Global
- Stark County issues fire emergency and burn ban tied to fire index rating -- Dickinson Press
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Factoid of the Week
North Dakota has the single largest deposit of lignite coal. The state contains an estimated 1.3 trillion tons of lignite of which an estimated 25 billion tons are economically mineable. This supply of coal will last for over 800 years at current production rates. Mining first began in the state in 1873 and continues today.
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April 23-24
Williston
April 24-25
Bismarck
April 30 - Stanley; May 1 - Grand Forks; May 2 - Jamestown
April 30-May 1 and May 2-3
Bismarck
May 5-7
Oklahoma City
May 7-8
Williston
May 9
Dickinson
May 27-29
Regina
June 17-20
Bismarck
July 16-17
Bismarck
July 16
Bowman
July 17
New Town
July 18
Van Hook
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Oil prices and rig count
April 12, 2019
WTI Crude: $63.89
Brent Crude: $71.55
Natural Gas: $2.66
North Dakota Active Rigs: 63 (up 1)
4/12
/2018
-- 59 rigs
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Geoff Simon
Editor/Executive Director
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