North Dakota Owed Millions in Royalties

North Dakota is in a hot dispute with oil and gas companies and industry leaders over improper deductions on royalties owed to the state.

Who Owns Mineral Rights Under North Dakota Lake?

The North Dakota Department of Trust Lands wants to collect millions of dollars in oil and gas royalties that it believes were improperly withheld by oil and gas companies that do business with the state.  The agency found the discrepancy during a recent audit of 19 companies from 2012 through 2014. 10 of those audited were found to have errors, according to Bismark Tribune.

“The bottom line is the companies would like to be able to take deductions because that helps them collect a smaller royalty. But my responsibility and the board’s is to ensure that the lease terms are followed and that we collect for the Common Schools Trust Fund and the other trust funds what they’re entitled.” - Land Commissioner Lance Gaebe

Getting to the bottom of the issue is being hindered because oil companies are hesitant to provide the necessary information. Industry leaders such as The North Dakota Petroleum Council are also pushing back through comments to the board and backing legislative action.

Read more at Bismark Tribune

Halcón Resources Corporation to sell Bakken Assets

Bakken Deal

Halcón Resources Corporation announced this week that it plans to sell Bakken assets. 

Halcón Resources Exits the Eagle Ford

Houston-based Halcón will sell a major part of its North Dakota operations in order to shift focus to the Permian Basin. The sale included operated assets in the Williston Basin to an affiliate of Bruin E&P Partners for $1.4 billion 

The sale of our Williston Basin operated assets transforms Halcón into a single-basin company focused on the Delaware Basin where we have more than 41,000 net acres in Ward and Pecos Counties representing decades of highly economic drilling inventory. The cash proceeds from this transaction and related debt reduction provide us with a strong balance sheet and liquidity to execute our growth plans.
— Floyd Wilson, Halcón's Chairman, CEO, and President

Halcón shares jumped more than 35% at the news of the deal. 

Halcón emerged from bankruptcy last fall, where it was able to eliminate approximately $1.8 billion in debt. Soon after, company executives announced it wouldl sell its Eagle Ford assets (“El Halcón”) to Hawkwood Energy for $500 million.

Fracking Benefits Local Economies

The University of Chicago’s Energy Policy Institute has issued the results of a study that shows the economic benefits of fracking on local economies outweigh undesirable side effects.

Related: North Dakota Faces $2 Billion Loss of Revenue

Between 2000 and 2013, researchers conducted a study of the communities near the nation’s most prominent shale formations. The results stated that the economic benefits to citizens during the boom years overshadowed the negative effects of crime, traffic, and pollution.

“This study makes it clear that on net there are benefits to local economies – which we believe is useful information for leaders in the United States and abroad who are deciding whether to allow fracking in their communities.”

— Co-author Chris Knittel, Professor at the MIT

Economic Benefits of Fracking to Local Communities

According to the study, the shale boom produced benefits valued at as much as $1,900 a year for the average household in nearby communities. Other impacts included: 

  • Income climbed 7 percent
  • 10% employment rate
  • Home prices increased by 6% (20% in ND)
  • Net benefits of around $300 a year for the typical household

Unpleasant Side Effects of Shale Boom

  • Higher crime rates
  • More traffic
  • More pollution
  • General anxiety over the environmental dangers
  • 20% increase in spending for police and public safety.

Read more at epic.uchicago.edu

Bakken Shale Counties Losing People

Bakken population

There are fewer people living in individual Bakken Shale counties, according to the U.S. Census Bureau.

Related: North Dakota Faces $2 Billion Loss of Revenue

The U.S. Census Bureau released new data last week showing every county in the Bakken Shale region experienced a decrease in population between 2015 and 2016.

The total population decline in these counties was 5283 people.

Dunn County in North Dakota lost the greatest percentage if it's population (6%) between 2015 and 2016. Dunn has consistently had some of the highest rig counts in the region for the past few years.

The biggest loss in total population numbers was Ward County in North Dakota, which dropped by 1065 in one year's time.  

The state population has seen a slight increase, with the agency reporting Montana's population increased from 1,032,949 in 2015 to 1,042,520 in 2016. North Dakota had a population of 757,952 in 2016, an increase over 756,927 in 2015.

Population in Bakken Counties

Population in Bakken Counties

The decrease in population is in stark contrast to the rush that came when the shale boom exploded in 2009, when the number of men in North Dakota jumped 14% (46,000), according to the U.S. Census Bureau. During that time, the state's population grew 12% with men accounting for two-thirds of that growth. The population of women grew 9% (30,000).

In 2015, we reported that Williston, N.D., experienced population growth ten times the normal rate, according to a recent study commissioned by the city. But the latest figures from the Census Bureu is showing a decline from 26,977 in 2015 to 26,426 a year later. 

Read more: North Dakota "Man-Rush"

Fallout from low crude prices made its way through the oil and gas industry throughout 2015 and 2016, with Bakken companies removing over 150 rigs from operation during that time. As prices stabilized, rig counts are slowing increasing. For last week, Baker Hughes reported 46 rigs running through our coverage area by Friday midday

Bakken Oil Now Flowing through Dakota Access Pipeline

Dakota Access Map

Energy Transfer Partners, L.P. has announced that the Dakota Access Pipeline is now pumping Bakken crude oil.

Related: Related: Violence Erupts at Pipeline Site

In a recent press release, the Dallas-based company said that the 1,200-mile line carrying Bakken oil to distribution points in Illinois began service on June 1st.

The highly controversial, 1,172 mile pipeline project cost an estimated $3.8 billion and will serve the North Dakota counties of Mountrail, Williams and McKenzie.

The Dakota Access Pipeline and the Energy Transfer Crude Oil Pipeline from Illinois to the Gulf Coast together make up the $4.8 billion Bakken Pipeline system.

Dakota Access Quick Facts

  • Construction of the pipeline has created roughly 12,000 jobs
  • Spurred hundreds of millions of dollars investment in heavy equipment and thousands of construction jobs to the state.
  • Over $3.54 billion spent on construction
  • Will continue to invest hundreds of millions a month into the U.S. economy
  • Once in operation, it will transport 470 000 bpd 
  • Has generated an estimated $156 million in sales and income taxes during construction, and $55 million in property taxes annually
Transporting crude from North Dakota to multiple major U.S. markets in a more direct, cost-effective, safer and more environmentally responsible manner than either rail or truck.
— Energy Transfer Partners

With production in the region expected to rise, some analysts predict that the DALP will reach 75 percent of capacity by year-end 2017. ESAI Energy is one source predicting that Bakken will continue to experience production growth through next year.