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Oil wells along Fort Berthold boundary subject of potential tax changes

Oil wells along Fort Berthold boundary subject of potential tax changes

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Burgum, Fox (copy)

Applause broke out in a room filled with officials representing state and tribal governments as Gov. Doug Burgum, left, and Mandan, Hidatsa and Arikara Nation Chairman Mark Fox hold copies of a compact both signed in early 2019 at the state Capitol in Bismarck. The compact maintains the current tax rate on oil and gas production and extraction within the Fort Berthold Reservation, while changing how the state and tribe share tax revenue from new oil and gas activity on trust and fee lands.

More changes could be on the horizon regarding the way oil taxes are divvied up between the Three Affiliated Tribes and the state of North Dakota, as the tribe seeks revenue from all wells that straddle the boundary of the Fort Berthold Indian Reservation.

Tribal Chairman Mark Fox, who has pushed to address this matter in the past, raised it again at a Friday meeting of the Tribal Taxation Committee at the state Capitol in Bismarck.

At issue are 132 wells that begin outside the reservation and extend horizontally across the border. The tribe does not collect any tax revenue on those wells, as the money goes to the state. For wells that begin on the reservation and then cross the border, both the tribe and state share in tax revenue.

Fox would like to see the tribe collect taxes from all wells at the border, not just the ones that begin on Fort Berthold.

He told committee members, which include state lawmakers and the governor, that the issue is a matter of “realizing revenue for our government, just like you do for the wells that go both ways.”

“The longer we wait, the more we lose,” Fox said. “That’s really a strong concern that we’ve got, that this needs to be resolved ASAP.”

For wells that begin on the reservation and cross the boundary, the proportion of tax revenue that goes to the tribe and the state depends on whether the well passes trust or fee land. Trust land is held by the federal government in trust for the benefit of the tribe, and fee land refers to private land within a reservation.

A major tax agreement struck in 2019 changed the percentage of taxes allocated for new wells drilled on Fort Berthold, depending on which type of land the well crosses.

As committee members discussed the issue Friday, a potential solution emerged in which the tribe collects taxes on all wells that cross the border, but possibly not on the portion of a well that extends outside the reservation.

Fox acknowledged that a solution might involve a “give and take,” in which the tribe loses some tax money collected on wells that reach land outside the boundary.

He indicated that the tribe is researching how this matter is handled on oil-rich Indian reservations in other states. He said he would also like to see data showing how much money went to the state, historically, that could have gone to the tribe had an agreement been reached earlier allowing the tribe to share in tax revenue from wells that begin off the reservation.

Gov. Doug Burgum asked state and tribal officials to work together on analyzing data related to the tribe’s concerns. He said he didn’t think modifying the tax agreement as discussed Friday would result in a major change to the amount of revenue collected by the state and tribe.

Future conversations on the issue will also involve Joel Brown, one of the founders of Watford City-based MineralTracker, who provided a report at Friday’s meeting showing forecasts of future oil production from wells that straddle the reservation border.

In total, 214 wells cross the boundary, Brown said. The 132 that begin outside the reservation are expected to produce a combined 30.6 million barrels of oil in the future. The 82 wells that start within the reservation and extend outward are anticipated to produce 21.5 million barrels. Slightly more than half the lateral footage of both sets of wells lies outside the reservation boundary.

Brown anticipates that 73 to 93 more wells straddling the border will be drilled in the future.

Reach Amy R. Sisk at 701-250-8252 or


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