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ND Oil Rush: Three Affiliated Tribes Want Higher Tax Cut for Road Repair

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North Dakota’s oil production is forecasted to double within the next decade, surpassing Alaska’s and lagging only behind Texas as the second largest oil-generating state, according to government official and industry estimates, stated James MacPherson ofthe Associated Press.

And AP’s Dale Wetzel says North Dakota’s Three Affiliated Tribes want a larger tax cut from the reservation’s production to care for its roads. "This is not a windfall, this is not a profit thing,” said Tex Hall, chairman of the Three Affiliated Tribes, during a hearing with North Dakota Senate’s Natural Resources Committee on February 4. “This is for our government, to build its roads, its health care and its infrastructure. If we don’t have the necessary monies, this will slow (oil production) down. We cannot be overrun. Our people’s safety and health come first.”

The Fort Berthold Indian Reservation, home to the Three Affiliated Tribes, sits on top of the Bakken shale rock formation, the epicenter of the oil-drilling hot spot in western North Dakota. About 350,000 barrels of crude oil pump out of North Dakota daily, Lynn Helms, director of the North Dakota Department of Mineral Resources, told AP's MacPherson. In 2010, the state was on track to yield about 110 million barrels—a nearly 28 percent increase from 79.7 million in 2009. “We are now looking at the possibility of 700,000 barrels a day and we see that coming in the next four to seven years,” Helms told the AP. That surplus may also come from the 2,000 new wells expected to be drilled in 2011, doubling the number of Bakken and Three Forks wells, according to estimates by Ron Ness, president of the North Dakota Petroleum Council, and Helms.

AP’s Wetzel reported that the Three Affiliated Tribes reaped $21.3 million in oil tax collections from reservation production from September 2008 through December 2010, according to North Dakota Tax Department data. During that time, the state collected $47.8 million in oil taxes from reservation production. Hall thinks the tribes’ cut of oil tax revenues from trust lands should rise to 80 percent, downgrading the state’s take from 50 to 20 percent.

Sen. John Warner, D-Ryder, whose district includes the Fort Berthold reservation, recently introduced legislation to meet the tribes’ request. If the current 50-50 split changes, North Dakota will lose an estimated $19.6 million in taxes during the 2011-2013 budget period that begins July 1, reported Wetzel for AP.

But Gov. Jack Dalrymple isn’t buying the change told the AP. He claims his proposed budget for road construction and repairs in northwestern North Dakota’s oil-producing region should not call for modification of the standing oil tax revenue sharing agreement with the Three Affiliated Tribes. “I think it would be preferable if we could get resources to them in other ways.”

Meanwhile, plans of the Three Affiliated Tribes to build a state-of-the-art oil refinery in Ward County remain on hold with the Environmental Protection Agency (EPA), reported KFYR-TV. The tribe has yet to obtain a permit. The refinery would help create between 600 to 1,000 jobs during its construction and employ 70 people after its completion, the tribes say. “We’re a minor source, what that means is that our emissions are under 100 tons per year,” Horace Pipe, a geologist and project manager for the Three Affiliated Tribes, told KFYR-TV, “but the federal EPA has no minor source permitting programs. So even though we can prove to the EPA that we are minor source there is no permit to grant us.”