Ten class-action lawsuits filed Wednesday seek millions of dollars in damages for what they say are lost royalty payments to mineral owners from natural gas flared by energy companies.
The mineral owners allege the companies have been flaring natural gas in violation of state laws.
“Our firm and other firms have been doing a lot of research and investigation for more than a year,” said Derrick Braaten, a partner with Baumstark Braaten Law Partners of Bismarck.
The lawsuits were filed in McKenzie, Williams, Mountrail and Divide counties, Braaten said. The defendants are Burlington Resources Oil and Gas Co. LP, Continental Resources Inc., Crescent Point Energy U.S. Corp., HRC Operating LLC, Marathon Oil, Samson Resources Company, SM Energy Company, Statoil Oil and Gas LP, WPX Energy and XTO Energy Inc.
The mineral owners claim they have lost millions of dollars in royalties because oil drilling companies burn off large quantities of gas instead of capturing and selling it.
Braaten said the lawsuits seek to force oil drilling operators to comply with state law and pay royalties to mineral owners for the value of flared gas going back six years.
North Dakota law limits the flaring of natural gas during the first year of production, Braaten said. After that, companies must apply to the North Dakota Industrial Commission for an exemption and if they fail to do so, they must pay royalties and state taxes, Braaten said.
The lawsuits allege that companies have been in violation of the limits set for the first year and have not sought exemptions.
Braaten said clients began contacting his firm and others based in Colorado, Texas, Montana and Wyoming with experience in such lawsuits.
“It’s going to be in the millions,” Braaten said of the cost.
Ron Ness, president of the North Dakota Petroleum Council, said he had not seen the details of the lawsuits Wednesday afternoon.
“I don’t quite get what they’re after here,” Ness said. “Certainly the operators are in compliance; they go to the North Dakota Industrial Commission.”
Ness said he did not know enough about the lawsuits Wednesday to comment further.
Jeff Zent, a spokesman for Gov. Jack Dalrymple, released a statement saying: “Everyone is in favor of greater utilization of natural gas and the reduction of flaring. The Industrial Commission continues to work hard to do just that,” Zent said.
Liz Brocker, a spokeswoman for Attorney General Wayne Stenehjem, said the office received notification of the intent to file the lawsuits, as a courtesy. She had no further comment.
A message left with the North Dakota Department of Mineral Resources Oil and Gas Division was unanswered on Wednesday.
The lawsuits can be found at www.ndgasflaringlitigation.com.
Twenty-nine percent of all natural gas in North Dakota was being flared as of August, the most recent state numbers available. Nationally only 1 percent is flared.
An oil and gas industry task force is holding meetings over the coming months to provide the Industrial Commission with ideas for reining in natural gas flaring.
Lynn Helms, director of North Dakota Department of Mineral Resources, said he will attend a meeting later this week of an oil and gas industry task force looking at ways to reduce flaring. The Industrial Commission will use those ideas to craft policy changes.