As Petroleum News Bakken has reported in the past two editions, the state of North Dakota and the federal government have staked claim to various land and mineral rights along the Missouri River which has resulted in many ownership disputes. Though the state is at odds with the federal Bureau of Land Management and Bureau of Indian Affairs, it is involved with even more complex disputes with private individuals.
“With the fee owners, there’s an unimaginable array of different opinions of how things ought to go,” said Keith Bayley with North Dakota Trust Lands.
For example, the survey completed for the state which delineated the ordinary high water mark in order for the state to issue oil and gas leases is being protested. Trust Lands told Petroleum News Bakken that some fee owners are hiring their own firms to conduct a survey which interprets the ordinary high water mark in a different location and filing lawsuits against the state.
When oil companies rushed to obtain leases for development, fee owners became upset when their private minerals were being offered for sale in a state lease. One fee owner that spoke with Petroleum News Bakken claims mineral ownership under Lake Sakakawea before it was flooded but the state took claim of it and sold the lease. She asked to remain anonymous as her family is gathering information about the land to eventually file a class action lawsuit against the state of North Dakota.
“The thing that angers us that own the mineral acres is that the state knew this oil boom was coming, but they never took the time to protect their citizens at all,” she said. “We’re living our normal lives, depending on our representatives to protect us and our rights, and in the meantime they are selling out to oil companies.”
Bayley expects the disputes to continue and that it will take a series of court cases to bring resolution.
Not everyone is angry
Drew Combs, director of Minerals Management Division of North Dakota’s Trust Lands, said some private fee owners do not oppose the state’s claim because they understand the river moved and they lost the acreage.
“Not every foot of river is in question,” he said. “There are some stretches where everyone agrees.”
While those exist, he admits the issue is still at a point where those areas of contention are affecting all the others. Because an oil company is allowed to suspend or escrow all payments in a spacing unit until the ownership dispute is resolved with the state, fee owners and the state don’t receive any royalty payments. Just as fee owners are busy researching their rights, Trust Lands’ staff feels it is still learning, too.
“It really is quite incredible; we’ve been in this Bakken seven to eight years and this is still in its infancy,” Bayley said. “There’s people like us scrambling around trying to figure out what we’re going to do, and everybody else is sitting around watching us trying to figure out the answers. We have one decision out of hundreds, so this is very early in the game yet.”
That one answer is the Reep v. State case which Petroleum News Bakken reported is what determined that the state owns to the ordinary high water mark. However, numerous surveys declare different locations for that mark.
“As far as a landman goes, this is a nightmare because you’re putting together prospects and tracts, you know exactly what is owned in those neat little boxes,” Combs said. “And then you get along the river, and it’s a big ‘I don’t know.’ The feds, state, fee owners all say something different.”
Willing to enter discussions
But despite what fee owners may think, Combs said the state is eager to work with them toward some type of solution.
“People need to be talking to us,” Combs said. “It’s amazing how quiet things are,” he continued. “Our board members realize there is an issue and we’re not inflexible; we’re more than happy to talk to you and maybe there is a workaround solution or … something we could be doing.”
He added that the board, which includes the governor and attorney general, does carry a lot of authority to resolve certain matters. But at the same time, the board has a fiduciary duty to the state.
“We know the easy way out, but there’s only so much we can and should do,” Combs said.
