Native American landowners in North Dakota are pursuing changes to a historic oil and gas tax sharing agreement struck earlier between their tribal government and the state. In 2019, the state of North Dakota and the Mandan, Hidatsa, and Arikara Nation reached an agreement to split taxes for oil and gas produced on the Fort Berthold Indian Reservation where oil production has surged over the past two decades. State Sen. Chuck Walen, R-New Town, and state Sen. Richard Marcellais, D-Belcourt, introduced Senate Bill 2304 on Tuesday that would pause the disbursement of oil and gas taxes collected from individual landowners on the reservation until the agreement is modified and the tribe submits federal audit reports. However, Walen said it came on behalf of land and mineral owners who argue that the agreement does not account for the rights of private landowners.
Over the past five fiscal years, oil extraction and production taxes have brought in more than 51% of all taxes collected by North Dakota–more than sales, property, or other taxes combined.
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However, the halcyon days of the Bakken Boom that turned North Dakota into the nation’s second-largest crude oil-producing state behind only Texas are over. In 2023, crude production in the higher-cost Bakken region clocked in at ~ 1.27 million barrels per day (bpd), nearly 18% below the late 2019 peak, with Wood Mackenzie estimating it will fall further to 1.15 million bpd by 2026 as inventory exhaustion sets in. Given this backdrop, it’s surprising that the North Dakota Public Service Commission inexplicably rejected an application by Summit Carbon Solutions to build a pipeline that would bring carbon dioxide from ethanol plants in the Upper Midwest to be stored underground in North Dakota. North Dakota Mineral Resources director Lynn Helms did not comment on the PSC’s decision but acknowledged the importance of bringing CO2 from out of state to North Dakota for enhanced oil recovery.
“Carbon dioxide has to come to North Dakota from somewhere, if we’re going to stabilize and sustain Bakken oil production. So, we’ve got to find a way for carbon capture and utilization to become a part of North Dakota’s economy, or we will leave billions of barrels of oil in the ground,” Helms said.
By Alex Kimani for Oilprice.com
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