April 28, 2017

ND Legislature Finalizes Oil Tax Distribution Changes
Townships Retain Full Funding, Hub Cities Get Certainty

After weeks of behind-the-scenes negotiations, House and Senate conferees reached agreement on SB 2013, which set funding levels for political subdivisions in the gross production tax distribution formula. 

Townships in the top nine oil-producing counties will remain at the same funding level as the current biennium, approximately $25 million divided among 400 townships. The House had proposed taking money from the oil townships to share with those in non-oil counties, but alternative funding sources were found to resolve the issue.

The hub cities and schools of Dickinson, Minot and Williston will have guaranteed funding levels for the first year of the biennium. There was concern the new mining employment definition upon which the distribution is based would be too low to provide adequate funding to service debts incurred by the three cities. Williston is guaranteed to receive $12,375,000 in FY 2017, Dickinson will get $6,375,000 and Minot will receive $1,500,000.  The legislation also includes an interim study of oil and gas tax revenue allocations to hub cities and hub city school districts. 

WDEA Executive Director Geoff Simon visited with Senator Brad Bekkedahl about Hub City funding and the interim study.  Click here to listen to their one-minute conversation.

The legislation also provides funding for the new airport in Williston and a runway rehabilitation project in Dickinson. Williston will receive a total of $35 million, with money coming from a newly-created energy impact fund and the state's Strategic Investment and Improvements Fund (SIIF).   Dickinson's $5 million will come from the SIIF fund. 
Legislature Approves State Takeover of Social Services Funding

Gov. Doug Burgum has signed into law SB 2206, which provides $160.7 million for a two-year pilot program that eliminates counties’ social services levy (up to 20 mills), and requires the state to pay the costs of county social services and economic assistance for 2018-19. In turn, the state will discontinue its 12 percent property tax buydown.

“Senate Bill 2206 gives permanency to a significant amount of property tax relief and is a more cost-effective and sustainable option than the buydown program, which lacked incentive to control local spending,” Burgum said. “Shifting the cost of social services to the state relieves counties of unfunded state and federal mandates and ensures that local taxpayers aren’t stuck footing the bill for services outside of their control.”

Under the bill, counties will be reimbursed for social services costs based on actual caseloads. The state Department of Human Services will analyze ways to improve the efficiency and effectiveness of social services delivery and submit a plan to the 2019 Legislature for a permanent funding formula.

Dickinson State Issues Resolved in Session's Final Days

Funding issues for Dickinson State University were settled in the higher education budget as the 2017 Legislature wound to a close this week. 

Amendments to SB 2003 reduced the cut that DSU faced in the coming biennium. To settle the issue, the City of Dickinson chipped in $2.5 million of its Hub City allocation from the oil tax distribution formula, and Stark County will give $375,000 to support DSU. 

The deal includes a $3.1 million set aside to pay off debt related to the Biesiot Activities Center.  The amendment also prohibits DSU from discontinuing any portion of its nursing program during the 2017-19 biennium.

Click here to read Dickinson Press article on this topic.

Williston Launches Web Site for New Airport

The City of Williston has unveiled a new way for people to track construction on the new Williston Basin International Airport.

Earth work on the $250 million project began last week. Site grading, which will cover much of the project’s 1,500 acres northwest of Williston, is likely to take all summer to complete.

New drone videos and still photos will be accessible on the www.xwaproject.com website via the press room. The site will be updated as construction moves forward. 

Read more about the project kickoff here.

Lands Board Awards EMS Grants

The Board of University and School Lands this week approved 28 grants to western North Dakota EMS organizations impacted by oil and gas production. 

The total amount of grant funds awarded was $2,315,102 and will support equipment and vehicle updates, volunteer stipends, advanced medical training, and staff funding to help continue services in areas where emergency calls have increased substantially since 2009. 

The Land Board is made up of Gov. Doug Burgum, Secretary of State Al Jaeger, Attorney General Wayne Stenehjem, State Treasurer Kelly Schmidt, and Supt. of Public Instruction Kirsten Baesler.

Click here to see the complete list of grants awarded.

Legislature Plans Study of Gas Royalty Issue

A study to determine the appropriate amount of royalty payments owed to mineral owners for natural gas produced in North Dakota will be the subject of a study by the state Tax Department. 

The study language is contained in SB 2013, the same bill that funded the state Department of Trust Lands and provided oil tax distributions to oil impacted communities.

The department believes some oil companies have taken improper deductions on natural gas royalties.  But the industry has a different interpretation of lease responsibilities to the state and other mineral owners. Legislators directed the Tax Department to study the issue during the 2017-18 interim, including determining the value of oil and gas and the reporting of deductions on royalty statements.

Lawmakers Want to Study Whether State Should Get Share of Wind Taxes

One of the last-minute amendments attached to HB 1015, the budget of the state Office of Management and Budget, calls for a study of the taxation of wind energy and the distribution of tax collections related to it. 

Language in the amendment says the study should consider various methods of taxing wind energy, the current and historical distribution formulas related to wind energy taxes, and the appropriate level of distributions to taxing districts and the state.

Under current law, 100% of wind energy taxes go to political subdivisions in the county in which a wind farm is located.  Legislation that would have given the state a share of wind taxes ( SB 2209) was defeated by the 2017 Legislature.
Work on Highway 2 in southwest Williston expected to close road most of the year

A major reconstruction project on U.S. Highway 2 is getting underway, and the road will be closed between 11th Street West and 139th Avenue Northwest much of the summer.

The project includes removing the existing asphalt, grading, storm sewer, sanitary sewer and water improvements and pouring a new concrete surface for the road. 

There will also be improvements to traffic signals, streetlights will be installed and the diagonal crossover at the intersection of Highway 2 and Second Street West will be replaced with a signaled intersection.  Read more about the project in the Williston Herald.
Watford City Roughrider Center Receives Tourism Award

Not yet one year old, the Rough Rider Center was recognized last week at the North Dakota Travel Industry Conference in Bismarck.

The facility received the Trailblazer Award for Tourism Innovation as part of Gov. Doug Burgum’s travel and tourism awards.

The Rough Rider Center has quickly become an asset to the community’s quality of life, featuring a fitness center, indoor waterpark, coffee shop, running track and event space for concerts and conventions. It offers one of the best sports facilities in the region with a six-lane swimming pool, water park component, two Olympic-sized ice arenas, a fieldhouse that can accommodate three basketball courts, three volleyball courts, professional quality football and baseball complex, an indoor soccer field or a roller derby arena, and a gymnastics center with a rock climbing wall, plus a 2,500-seat arena. The high school, connected to the facility, has use of the 550-seat Fine Arts Theater. 

Oil Emulsion Spill Reported in Bowman County 

The North Dakota Department of Health has been notified of an oil emulsion spill resulting from a pipeline leak in Bowman County. The pipeline is a buried 3- inch diameter flow line operated by Continental Resources. The spill was discovered April 22 about five miles southwest of Marmarth and was reported that same day. 

An estimated 18 barrels of Red River Formation crude oil and seven barrels of brine leaked from the pipeline. Crude oil from the Red River Formation has a thicker consistency than Bakken crude oil and therefore will make for quicker cleanup. An unknown amount of emulsion has flowed into and impacted about 14 miles of the Little Beaver Creek, a tributary of the Little Missouri River. Crude oil has not reached the Little Missouri River.

The section of pipeline that leaked has been isolated and is currently being excavated. Continental Resources is working with a remediation contractor that specializes in water-oil cleanup. 

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Upcoming Events

April 30- May 7
U.S. Highway 85 Clean-Up week 

May 2
Williston Basin Chapter API Monthly Meeting
 6:30 p.m. Grand Williston Hotel & Conference Center.

May 2-4 
Williston Basin Petroleum Conference Regina, SK, Canada

Mountrail County Hwy Dept, Stanley ND

May 16

June 19-22
ND Petroleum Council Teacher Seminar
Bismarck, ND

July 17-19, 2017
Bismarck Event Center

Oil prices and rig count

April 28, 2017

                                                      WTI Crude: $49.14
                                                   Brent Crude: $51.71
                                                     Natural Gas: $3.27

              North Dakota  Active Drills: 49 (unchg)        4/28/16 -- 29 rigs

Geoff Simon
Editor/Executive Director

Mike Kopp, Editor
Mike Kopp, Mykuhls Photography, Photographs
Western Dakota Energy Association