The surge in oil discovery and production promises to be a windfall for the Three Affiliated Tribes on the Fort Berthold Reservation, based in New Town, N.D.
Much of the new oil pool found in the past year around Parshall, N.D. - and part of the huge Bakken Formation across the larger region - is on the reservation, which includes tribal land and privately held allotted land.
The big difference now is that during the last oil boom in the region, the federal government, and not the tribe, owned the mineral rights to oil under tribal lands, said Fred Fox, natural resources administrator for the tribe.
Now the tribe owns them. "They were just recently given back in the 1984 Fort Berthold Reservation Mineral Restoration," he said.
The first years of the tribe's new mineral ownership were uneventful, largely because low oil prices discouraged oil companies from drilling anywhere in the Williston Basin. It means now there is huge untapped potential on the reservation.
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"Our area over here is just undeveloped and unexplored," Fox said. "With this recent Bakken activity, it's just taken off."
In the money
An old well was reinvigorated early this year on the reservation, and he hopes that five will be drilled by the end of the year.
But money already is rolling in.
Fox expects the tribe to collect $12 million in lease bonuses alone by the end of this year from about eight oil companies busy leasing the right to drill on about 250,000 acres owned by the tribe.
The leases normally involve annual per-acre rental payments made to mineral rights owners for three or five years, typically, for the right to drill on the land. Bonuses, sometimes of hundreds of dollars per acre, also are usually paid up front by oil companies to obtain the lease.
Oil companies are leasing another 350,000 acres on the reservation owned by allottees, who obtained the land over the years through the tribe, Fox said. The allottees could be tribal members or not, he said.
The Bureau of Indian Affairs handles leases for allotted lands, but each allottee is free to negotiate a lease with an oil company, Fox said.
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The tribe plans to spend the leasing money on economic development and meeting costs not met by federal revenues, Fox said. The tribe formed an economic development committee earlier this year, spurred by the interest in oil.
Once oil wells begin producing, royalties of about 17 percent of the value of each barrel will come to the tribe and other mineral owners of land on the reservation.
Refinery plans
The tribe also is working to get an oil refinery built on the reservation. He hopes to see the permits approved by the end of the year, Fox said.
The tribe also is trying to get a piece of state oil taxes. The state of North Dakota has authority to tax oil production in the state, including on the reservation. Because the tribe also has had an oil extraction tax in place, the double-taxation situation has curbed the enthusiasm of oil companies to work on the reservation.
"Right now we are negotiating on sharing the tax with the state," Fox said.
The tribe is forming its own agency to oversee all oil and gas production on the reservation, he said. "To basically maintain a balance with the state, the BLM (Bureau of Land Management) and the tribe."
The Three Affiliated Tribes - Mandan, Hidatsa and Arikara - have about 12,000 enrolled members, half of whom live on the reservation, Fox said.
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Many tribal members already work in the oil business in various ways. With the official state estimate that each oil well drilled means 40 jobs directly created and another 80 indirectly created, the promise is of a lot of jobs for tribal members, as well as overall economic benefits, Fox said.
Reach Lee at (701) 780-1237; (800) 477-6572, ext. 267; or slee@gfherald.com .
