Legislature passes bill to clarify mineral rights under lake

By James MacPherson, Associated Press

The North Dakota Legislature has endorsed a measure intended to clarify disputed ownership of minerals under a Missouri River reservoir, a move that's estimated to cost the state nearly $187 million it already has collected in oil-drilling royalty payments that must be returned.

 

BISMARCK, N.D. (AP) — The North Dakota Legislature has endorsed a measure intended to clarify disputed ownership of minerals under a Missouri River reservoir, a move that's estimated to cost the state nearly $187 million it already has collected in oil-drilling royalty payments that must be returned.

The legislation approved by the House on Wednesday and by the Senate a day earlier limits the state's mineral claims under Lake Sakakawea to a smaller area than it had claimed. At issue was whether mineral rights under the state's biggest lake should be determined by a 1950s federal survey of the pre-dammed river channel or a broader 2009 North Dakota survey that backers of the bill believed was used to improperly obtain minerals for the state.

Opponents of the measure, mainly Democrats, argue the state could use the money to make up for declining tax revenues due to slumping oil and crop prices. But backers of the measure say the mineral rights should be returned to the rightful owners, despite the financial impact to the state.

Oil companies lease drilling rights from mineral owners that get a share of the income from oil the well produces.

"These are dollars that were collected that rightfully belong to mineral owners," said Bismarck Republican Rep. George Keiser. "They should receive the money they have not been paid to this point."

Rep. Marvin Nelson, a Democrat from Rolla, said the state has been unfairly criticized for taking part in a "land grab," and that mineral ownership should be settled by a judge, not lawmakers.

"Let the court settle the facts," he told fellow lawmakers. "Don't spend money on what we should not do."

The state and federal government, land owners and oil companies all have an interest in oil that lies under Lake Sakakawea, a 180-mile-long lake created in the 1950s when the Garrison Dam was built on the Missouri River.

Drillers first tapped crude underneath the lake about a decade ago using advanced horizontal drill techniques. But the drilling technology that allows rigs to be set up far from the shoreline also led to lawsuits due to conflicting claims of ownership of the same minerals, and a slowdown of drilling there due to the uncertainty over mineral ownership.

The state Department of Trust Lands, which manages rights to explore for oil, coal and other minerals in the state, estimates the legislation will result in 25,000 fewer acres claimed by the state, including about 7,300 acres that will revert to federal ownership.

The bulk of the money for the measure's cost will come from the state's Strategic Investment and Improvements Fund, which is supported with oil and gas taxes. The fund is projected to hold about $365 million at the end of the current budget cycle that ends June 20. The bill also includes an $87 million line of credit from the state-owned bank of North Dakota to cover costs.

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