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Tuesday, October 1, 2019

Tax-Sharing/Oil Revene On The Reservation -- October 1, 2019

Previously posted and first published by argusmedia back on April 3, 2019, but worth a re-look in anticipation of the October Director's Cut with August, 2019, production data.


The story: North Dakota tax-sharing law for native American tribes will have dramatic impact on production from the Fort Berthold reservation / Dunn County. Data points:
  • definitions:
    • tribal trust lands: land "owned" by all Native Americans residing on the reservation; "public" land as it were
    • fee lands: privately held lands that are leased
  • the history of "allotment" -- "public" vs "private" on Indian reservations can be found here -- the General Allotment Act of 1887 (Dawes Act) -- to me, sounds much like the Homestead Act of 1862;
  • previous North Dakota law:
    • "trust" or "public" land on the reservation: a 50/50 split with the state of North Dakota
  • new law:
    • "trust" or public" land on the reservation: 80/20 split with the state of North Dakota, with most going to the tribes
    • fee lands: 80% to the states; 20% to the tribe (I'm not sure if that means private individuals who leased the land are now sharing their royalties with the tribe in general; perhaps a reader can help me out)
  • Fort Berthold: almost a million acres (980,000 acres)
    • trust lands: 423,000 acres
    • the rest: privately held fee lands; federally owned lands; homestead lands
  • the reservation is home to the MHA nation, or Three Affiliated Tribes (TAT): the Mandan, the Hidatsa, and Arikara
  • the dispute that led to changes and current law began in 2015 ...
    • when lawmakers reduced the tax on overall production from 11.5pc to 10pc without buy-in from tribal authorities. The dispute gave rise to industry concerns that some production might end up with a double tax
  • new plan had bipartisan and tribal support
  • major obstacle for increased production: flaring (discussed monthly in the Director's Cut) 
The next Director's Cut is scheduled to be released October 18, 3:00 p.m, which I believe is a Friday. Link here for schedule. That Director's Cut will have production data for the month of August, 2019.

My hunch, as long as we are on the subject:
  • 99% chance that North Dakota will set another all-time BOEPD production record
  • better than 75% chance that North Dakota will set the third consecutive monthly all-time BOPD production record
  • it should be noted, that unlike oil, there is a huge delta between produced natural gas and sold natural gas

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