040518-nws-xto-energy

XTO Energy representative Teresia McGinnis answers questions from Bruce Hicks, assistant director of the North Dakota Oil and Gas Division, during a public hearing in April in Bismarck for a proposed oil drilling unit near Lake Sakakawea. 

The North Dakota Industrial Commission has approved a drilling unit near Lake Sakakawea, but made some changes that regulators said would protect royalty owners.

XTO Energy proposed to develop 26,000 acres in Williams and McKenzie counties as one large unit, a plan the company said would allow oil wells to be located farther away from Lake Sakakawea.

The company said during a hearing in April that the proposal, known as the Hofflund-Bakken Unit, would allow more oil to be recovered but minimize the impact to sensitive terrain.

Petrogulf Corp., one of about 150 working interest owners within the proposed unit, objected to the plan. Petrogulf representatives said variability in geology within the unit would make developing the resource as one unit unfair.

Director of Mineral Resources Lynn Helms recommended the plan be approved, but divided into two units — the Hofflund and Grinnell units — because of significant differences in the geology.

Helms also recommended changes to the royalty distribution formula that he said would make the plan more equitable.

The Industrial Commission gave unanimous approval Thursday to the unit with the changes recommended.

Agriculture Commissioner Doug Goehring, one of three members of the commission, said a positive aspect of the plan is that wells will be a half-mile or farther from Lake Sakakawea.

“We do appreciate that we're going to have less of a footprint out here by doing this,” Goehring said.

XTO will need approval from 55 percent of royalty owners and working interest owners before proceeding with the development.

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(Reach Amy Dalrymple at 701-250-8267 or Amy.Dalrymple@bismarcktribune.com)

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