February 28, 2020 -- A Moment of Clarity
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Lands Commissioner Jodi Smith (upper left) and Land Board members listen to Treasurer Kelly Schmidt (back to camera) during a meeting aimed at clarifying the Land Department's guidance to oil industry operators regarding the issue of unpaid royalties on natural gas.
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Land Board Clarifies Royalty Repayment Terms
"Lookback Period" May be Shortened in Settlements
Members of the state Board of University & School Lands tried to provide additional clarity this week to the state's oil and gas producers who recently received non-compliance
letters from the Land Department which notified them they would be subject to interest and penalties if royalties owed to the state were not paid within 90 days.
The ND Petroleum Council characterized the letter as an "overreaction" to a state Supreme Court decision regarding royalty deductions associated with processing natural gas. The Land Board, chaired by Governor Doug Burgum, requested additional information from the department regarding the notification process and guidance that has been provided to producers regarding the appropriateness of deductions for post-production costs incurred to make natural gas marketable.
Because there is a large difference between the value of crude oil and the gas associated with its production, Burgum said it's important to find the right balance when enforcing competing or conflicting provisions in the state's laws and regulations.
Click
here to listen to Burgum's comments.
The discussion revolves around the ND Supreme Court's ruling in the case of
Newfield Exploration v State of North Dakota in which the court said proceeds from which royalty payments are calculated may not be reduced by expenses associated with making gas marketable. NDPC took issue with the state's "lookback" period going as far back as 1979, and complained that 90 days was insufficient time to calculate the amount of royalties that companies owe.
Because some operators were confused about the state's interpretation of allowable deductions and there is uncertainty about when and if they were notified they were not in compliance, Attorney General Wayne Stenehjem asked that the Land Board see documentation of the notices.
Click
here to listen to Stenehjem's comments.
The Land Board took no formal action at its meeting, but by consensus urged non-compliant companies to contact the Land Department to determine how to settle their debt. Operators were assured they if they were working in good faith to resolve their case, penalties would not be imposed. The board also suggested the lookback period could be part of settlement negotiations with Land Department staff.
Gov. Burgum said it was important to provide clear guidance to operators because of the competitive nature of the oil production business.
Click
here to listen to Burgum's comments.
Near the conclusion of the meeting, Stenehem assured producers in attendance that the state wanted to work with them to resolve the issue.
"We're not trying to be vindictive here," Stenehjem said. "We're simply trying to be reasonable and responsible with respect to our own obligation."
Click
here to read a detailed article about the meeting from Amy Sisk in the Bismarck Tribune.
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Williams, Jundt Elected to D8 School Board
Sarah Williams and Chris Jundt were elected to seats on the Williams County District 8 School Board in a special recall election this week.
Jundt, who led a petition drive last fall to recall board President Penny Soiseth and board Vice President Curt Sullivan, was the leading vote-getter with 434 votes. Williams finished second with 399 votes. Soiseth received 310 votes and Sullivan 309. Another challenger, Salena Gustaveson, received 109 votes.
District 8 and the Williston No. 1 District have been embroiled in a sometimes controversial discussion to try to cope with rapidly growing enrollment in the two districts. Because its high school is already overcrowded, Williston recently announced it would no longer accept high school students from District 8, which is currently a K-8 district. In response, the board of District 8 has been making plans to open a high school this fall. With the turnover on the board, those plans could change.
In a post-election interview with KXWI 98.5's Williston Trending Topics News Radio Live program, Jundt said he expected the District 8 board would re-open negotiations with the Williston District, which this week voted unanimously to support reopening the discussion.
Click
here to listen to Jundt's comments.
Some speculated during the campaign that the election of Williams and Jundt would result in dissolution of District 8, but Williams said that rumor is false. She said she's looking forward to receiving results of a public survey being developed by Williams County, and more public input on possible solutions.
Click
here to listen to Williams' comments.
In addition to Williston No. 1 and Williams District 8, the county is home to all or parts of five other school districts - Eight Mile 6, Grenora, Divide County, Tioga and Nesson (Ray). Click
here to see the map.
Click
here to view the full Williston Trending Topics Facebook video interview with Williams and Jundt.
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District 8 Elementary Bond Vote Narrowly Fails
Voters in Williams County District 8 narrowly defeated a $28 million bond issue that would have built a 600-student elementary school.
A little more than 56 percent of voters approved the proposal, but it required 60 percent or more to pass. Unofficial results showed 458 voted yes on the school bond, and 354 voted no. It required 60 percent approval to pass.
The District 8 board will meet Monday, March 2, to officially canvass results of the election.
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Hocker Named to WDEA Executive Committee
The Executive Committee of the Western Dakota Energy Association this week appointed Dickinson School Superintendent Shon Hocker to the fill the vacant education position on the board.
Hocker fills the unexpired term of Joanna Baltes, president of the Williston School Board, who resigned her position on the WDEA board in January after announcing she and her family plan to move from the community.
Hocker joined the Dickinson district in June 2018 after serving 11 years as superintendent in Cowley, Wyoming. He also has previous experience as a high school principal in Shelley, Idaho. Hocker holds a doctorate in Educational Leadership and Administration from Idaho State University.
In an
interview with the Dickinson Press when he was hired for his current position, Hocker described his strengths and weaknesses.
"I really feel what I do best is empower those who I am surrounded by to do their best. I feel that is a strength," he told the newspaper. "Where do I need improvement? That's patience, because I want things right away, I want to see results right away. I want to see that end product right away. I want that student to excel right away, and I understand things take time."
The Executive Committee term to which Hocker was appointed runs through Fall 2021, at which time he would be eligible for re-election.
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DAPL Expansion Still Pending in Illinois, Iowa
State and local officials in North and South Dakota have given their blessing to a project that would nearly double the capacity of the Dakota Access crude oil pipeline, but the company's application is still awaiting action in Illinois and Iowa.
Dakota Access has responded to an
order from the Iowa Utilities Board issued in mid-January seeking additional information about the "optimization" project that would expand the existing transport capacity from 570,000 barrels per day to 1.1 million bbl/day. The IUB order sought among other things an explanation of the effect that a drag-reducing additive would have on pipeline components and whether the increased flow would increase the amount of oil released if a spill occurs.
In its
response, Dakota Access said it's impossible to say with any certainty whether the increased flow would increase the size of a spill because there are so many variables. But it emphasized there is no basis on which to conclude the chance of a spill or its size would increase with optimization. In an
affidavit, the company said the use of a drag-reducing agent does not adversely impact the longevity of pipeline equipment. The Iowa board also wondered if 1.1 million barrels was the maximum capacity of the pipeline without any change to its maximum operating pressure. The
response of Dakota Access said it has not performed an engineering reviews for volumes beyond its optimization plan.
Dakota Access has also filed several documents in Illinois in advance of a March 5-6 hearing before the Illinois Commerce Commission. Most of its comments were submitted in response to claims of pipeline opponents - the Sierra Club and Save Our Illinois Land. Rebuttal
testimony submitted by Jeff Makholm refutes allegations by opponents that shipper transactions involving multiple owners and affiliates call into question their legitimacy. Makholm said such transactions are routine business in the pipeline industry. Makholm also refuted a claim by opponents that security terms in Dakota Access transportation shipping agreements suggested the company felt Bakken production would soon decline. Rebuttal
testimony submitted by Glenn Emery provided details of existing shipping agreements, and a description of binding contractual commitments from shippers for additional capacity.
The ND Public Service Commission gave its approval to the project last week. In an interview this week on the radio program
Energy Matters, PSC Commissioner Randy Christmann said he expects North Dakota will see tremendous benefits from expanding the pipeline's capacity.
Click
here to listen to Christmann's comments.
Click
here to read the ND PSC's Findings of Fact and Conclusions of Law in the DAPL case. Click
here and advance to the 21:38 mark to listen to the full
Energy Matters interview with Christmann.
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Williston Awards $650K in STAR Grants
The STAR Fund in Williston announced awards this week totaling over $650,000 going to 13 projects including a new daycare center, the re-opening of a full-service coffee shop, and a second location for a pet groomer.
Williston Economic Development Executive Director Shawn Wenko says 2020 is off to a solid start.
“We are picking up right where we left off of in 2019,” Wenko said. “We are still seeing a lot of interest in the Flex PACE Interest Buydown program which leverages Bank of North Dakota funds. For every dollar we commit, BND matches at a rate of nearly two to one. It’s a great program for our community and our local lenders.”
Notable projects this month included Busy Bees Hot Oil Inc., Daily Addiction, Genesis, Light of Christ Lutheran Church, Lolo Peak Properties, PRK Tool Sales LLC, and Zoom Groom LLC.
Click
here to see the complete list of projects and programs receiving the STAR Fund allocations.
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NDDOT Partner with UAS Flight Operations
Enhance Emergency Response in Flood Areas
An 'eye in the sky' will take on a new meaning when spring flooding rolls around again in North Dakota. In a partnership with the Northern Plains UAS Test Site (NPUASTS), the ND Department of Transportation is launching a program to supplement its current unmanned aircraft systems program.
“This partnership is another great example of how our whole-of-government approach to natural disasters and other major events is enhancing services for North Dakota citizens,” Gov. Doug Burgum said. “Harnessing this cutting-edge technology to improve flood preparation and response efforts shows again why North Dakota is the nation’s proving ground for UAS.”
The plan will provide UAS flight operations and capture photo and video for NDDOT to enhance emergency response to flooding across the state.
“We are very excited for this partnership and what it means for our UAS program and the state of North Dakota,” said NDDOT Director Bill Panos. “This imagery will provide us with valuable information and give us a new prospective on flooding.”
NPUASTS will utilize its own resources and local vendors to accomplish the emergency response efforts.
“The goal of the project is to use drones to provide key stakeholders the information they need to make critical decisions in regard to the anticipated flooding,” said Nicholas Flom, executive director of NPUASTS. “This information can help make critical decisions in a timely manner like determining when a road may become impassable and also allowing roads to reopen sometimes days or even a week sooner than normal inspection methods.”
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Youth Urged to Sign Up for NextGen
Recruitment is underway for a youth advisory council to provide voice, insight and vision to North Dakota’s energy and agricultural interests.
Three of the state’s largest associations – the Lignite Energy Council, the ND Petroleum Council and the ND Farm Bureau – are partnering on the project. Interested North Dakota students in grades 7-11 are encouraged to sign up at
www.NextGenND.com. The deadline for signing up is June 1, 2020.
Selection of 15 students will occur by July and a survey will be sent to participants to determine their interests, methods of meeting online or in-person and to set up tours of ag-processing facilities, oil-related businesses, power plants and coal mines. The NextGen ND project will allow students to both learn about and have input regarding North Dakota’s future as industry groups work together to provide food and energy for coming generations.
Representatives of the three industries – agriculture, oil and coal – will each pick five students who they feel will provide the best input into the challenges facing their industries. Participants will be chosen based on commitment, leadership and communication skills.
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2020 WBPC Agenda Announced
The event has become the largest conference in North Dakota and it’s scheduled for the Bismarck Event Center on May 19-21.
Event organizers released the conference agenda this week that includes 17 Bakken CEOs and executives. Click
here to view the agenda.
”The WBPC is one of the top oil conferences in the country. We have an incredible lineup of speakers,” said Ron Ness, president of the North Dakota Petroleum Council, the lead organizer of this year’s conference. “We are excited to feature the latest technologies that have helped turn the Bakken into a world-class resource and discuss the way forward to help take the Bakken and Williston Basin to the next level.”
The conference will feature more than 70 speakers and presenters, each sharing insights on the latest issues impacting oil and natural gas development and what the future holds for the Williston Basin.
The list of speakers includes Mike Sommers, the president and CEO of the American Petroleum Institute addressing The State of American Energy. API is the only national trade association that represents all aspects of America’s oil and natural gas industry.
Click
here to register for the conference. Click
here for an article from the Bismarck Tribune.
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Registration Open for Lignite Teacher Seminar
The Lignite Energy Council is now accepting applications for the 2020 edition of its teachers education seminar.
More than 3,400 teachers have attended the LEC seminar since it began in 1986. The 2020 event will be held June 8-11 with space limited to 130 elementary and secondary teachers from Minnesota, Montana, South Dakota and North Dakota.
The seminar is actually a two-credit college class. Participants can receive continuing education credit from the University of North Dakota (Teaching & Learning), North Dakota State University (Education), or Minot State University (Science).
The seminar will be held at Bismarck State College and provides teachers with the information and educational materials they need to teach their students how lignite is mined and used to produce electricity for homes, farms and businesses in the Upper Midwest. In addition, the seminar covers lignite’s impact on the region, as well as important environmental issues affecting the lignite industry. The event includes a tour or a lignite mine and coal-fired power plant.
Click
here for seminar registration details.
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Outdoor Heritage Fund Accepting Applications
The ND Industrial Commission is currently accepting applications for the North Dakota Heritage Fund Program. Applications will be accepted through March 13.
North Dakota’s Outdoor Heritage Fund was established in 2013 by the Legislature as a way to provide grants to state agencies, tribal governments, political subdivisions, and nonprofit organizations for projects that will:
- Provide access to private and public lands for sportsmen, including projects that create fish and wildlife habitat;
- Improve, maintain and restore water quality, soil conditions, plant diversity, and animal systems, and support other practices of stewardship to enhance farming and ranching;
- Develop and enhance the conservation and restoration of wildlife and fish habitat on private and public lands; and
- Conserve natural areas and create other areas for recreation through the establishment and development of parks and recreation areas.
The application form and information on projects that have been awarded funding in the past are available
here. For more information on the program, contact Andrea Pfennig (701-328-3786) or Karlene Fine (701-328-3722) or click
here.
The North Dakota Outdoor Heritage Fund Program is overseen by the North Dakota Industrial Commission.
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Write it Down on Your Calendar!
WDEA 2020 Annual Meeting
Get this date on your calendar! The Annual Meeting of the Western Dakota Energy Association will be held:
October 7-8, 2020
The Grand Williston Hotel & Conference Center
Williston, ND
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Quick Connect
- Coronavirus fears pose big 'speed bump' in ND oil patch -- Fargo Forum
- ND Safety Council: One Basin, One Way program one year later -- KXMB-TV
- Department of Mineral Resources keeps track of oil company issues and penalties -- KFYR-TV
- Opponent shifts focus; defeat measure on approving constitutional initiatives -- Bismarck Tribune
- ND Dems respond to Bernie Sanders' oil position as presidential caucus nears -- KFYR-TV
- Williston State College introduces apprenticeship program on maintenance tech -- KFYR-TV
- Watford City working out ideas for a careers academy for youth and adults -- Williston Herald
- Interpreter helps Watford City schools with non-English speaking students -- Bismarck Tribune
- Killdeer school administrators: Potential new high school under discussion -- KFYR-TV
- Calls for service down from last year; Dickinson PD releases annual report -- Dickinson Press
- Eckert Home gets state contract as adolescent addiction treatment facility -- Williston Herald
- Hundreds attend North Dakota land reclamation conference in Dickinson -- KXMB-TV
- Economic development director reflects on first year and future plans -- Beulah Beacon
- Minot Area Development Corp. and Chamber to begin merger talks -- Minot Daily News
- Mule Deer Foundation, ND oil industry team up to boost wildlife habitat -- Williston Herald
- Mitch Ostlie appointed to vacant North Dakota District 12 House seat -- Bismarck Tribune
- 'As essential as roads': How North Dakota became a broadband leader -- Yahoo Finance
- New report says Green New Deal would "destroy" middle class America -- Inside Sources
- Company withdraws from $20 billion oil sands project, cites Trudeau's policies -- Daily Caller
- U.S. pushes changes to western land plans that judge previously blocked -- Associated Press
- Natural gas crushing wind and solar power, why isn't anyone talking about it? -- FOX Business
- Breathe a little easier: Why American's air is now among the cleanest in the world -- IER
- Scientists disagree with key findings in new Univ. of Rochester methane study -- Energy in Depth
- Battle preventing NY gas-fired plant repowering ongoing as permit submittal nears -- S&P Global
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Factoid of the Week
The dragline used to mine lignite at the Freedom Mine north of Beulah weighs 13 million pounds. The machine stands 215 feet tall, has a boom 340 feet long, and has a base of 80 feet. The bucket on the 12,000 hp dragline holds 124 cubic yards of earth, about the size of four Chevy Suburbans.
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March 6
Williston
March 9
Bismarck
March 16
Bismarck
March 17
Kenmare
March 19
Bismarck
March 19-21
Minot
March 24
Bismarck
March 27-28
Bismarck
April 1
Bismarck
April 21-23
Four Bears - New Town
April 28-30
Watford City
May 19-21
Bismarck
June 8-11
Bismarck
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Oil prices and rig count
February 28, 2020
WTI Crude: $44.76
Brent Crude: $50.52
Natural Gas: $1.68
North Dakota Active Rigs: 52 (down 2)
2/28
/2019
-- 67 rigs
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Geoff Simon
Editor/Executive Director
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