New kid gets lesson in oil finances, 'Watch out'

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WILLISTON - A kingpin county in Coal Country is the newest kid on the block in the oil patch.

Mercer County joined the North Dakota Association of Oil and Gas Producing Counties, making it the 17th county to belong and the first new member in decades.

The county's representative, John Phillips, Beulah's city planner, attended the Williston Basin Oil Summit Tuesday in Williston. Phillips, like a couple of hundred other town, county and state officials, got the lowdown from the industry, which is in a more somber, reserved mode than it was a year ago.

Mercer County's first and, so far, only oil well - by XTO Energy - is in the far western zone of the county, about as

close to Dunn County as it can get.

Still, it does mark the county's entry into the world of Bakken oil development and Phillips got a few words of advice from Dunn County Commissioner Bob Kleeman, who has helped preside over several years of frenetic drilling activity there.

"Watch out," he told Phillips. "It's going to cost you a whole lot of money. There's not enough money in 10 years to take care of it, and if they gave it to you now, it wouldn't be enough."

County officials throughout the oil patch are pressing the Legislature for a larger share of oil tax money, especially since oil revenue is making the state unusually flush compared to other years and other states right now.

Phillips, who is chairman of the Coal Conversion Counties, said coal impact is stable after a boom of power plant building more than two decades ago, with road use confirmed to a relatively small permit area.

Not so in oil country.

Kleeman said more than 300 miles of Dunn County roads are affected by oil activity, compared to 80 miles used for an earlier phase of oil development 20 years ago.

"It's all spread out," he said.

Kleeman said Mercer County, with its bigger retail and service base, would be better positioned to handle the worker who, for example, is looking for food or a pair of coveralls at 11 p.m.

"Housing, I'd guess you'll be in the same predicament we are," Kleeman said.

Phillips said there's talk of merging the oil and gas counties association with the coal counties association, since the Bakken affects both Mercer and McLean, which, along with Oliver County are the three coal-producing counties.

Kleeman said communication is important among counties, especially with the legislative session starting next month and a biennial opportunity to change funding.

"We've all got to be on the same wavelength," Kleeman said.

Mountrail County Commissioner Greg Boschee said the county just tore out 10 miles of paved road that were beat up beyond repair by oil development.

"We just tore up $8 million worth of pavement we can't afford to put back down," Boschee said. "Everyone's overworked, underpaid and the roads are really cruddy. We need a lot of money. We deserve it."

Vicky Steiner, director of the oil and gas association, said her group will continue to work for more money for counties to pay costs of oil development.

She said Mountrail County received $4.6 million last biennium as its share of the oil tax. Without the cap put on by the Legislature back in the '80s, the county's share would have been about $15 million, she said.

(Reach reporter Lauren Donovan at 888-303-5511 or lauren@westriv.com.)

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