Leasing on the fringe

NDTL lease nominations rebound but activity remains in outlying counties

Mike Ellerd

Petroleum News Bakken

After declining to an 11-year low in February, the number of nominated acres for the May North Dakota Department of Trust Lands oil and gas lease auction rebounded seven-fold; however, as with most of the recent Trust Lands auctions, a majority of the nominated acres are outside the traditional Bakken petroleum system core area.

A total of 18,133 acres in 221 tracts were nominated for the May auction, up from the 2,552 acres leased in the February auction, although all of the nominated tracks still have to be vetted by a variety of North Dakota agencies.

Of those 18,133 nominated acres, 3,479 acres, just 19 percent, are in the traditional Bakken system counties of Divide, Dunn, McKenzie, Mountrail and Williams. The remaining 81 percent of the acres are either on the fringe or outside of the Bakken petroleum system and extend from Renville to Bowman counties (see map).

Bowman County in far southwest North Dakota has the largest number of nominated acres at 4,624, followed by Ward County with 3,015 acres, Burke County with 2,069 acres, and Golden Valley County with 1,842 acres (see table).

Of the acres nominated in the traditional Bakken core counties, most are in Williams County with 1,637 acres and Dunn County with 1,069 acres. In the other three traditional Bakken core counties, 442 acres were nominated in McKenzie County, 280 acres in Divide County and 51 acres in Mountrail County.

Nominators

A total of 14 entities nominated tracts for the May auction, and 78 percent of the acres were nominated by just five nominators. At 3,983 acres, KDM Petro Management LLC of Bismarck nominated the most acres, all in Bowman County. At a very close second, Lewis Oil Co. LLC, also of Bismarck, nominated 3,946 acres, which include all of the acres in Burke and Divide counties and most of the Williams County acres. Paladin Resources Inc. of Minot nominated 3,015 acres, all of which are in Ward. Nancy Bohl of Bismarck nominated all of the 1,842 acres in Golden Valley County, and Restoration Properties, also of Bismarck, nominated 1,470 acres in Bowman and Dunn counties.

The remaining 11 percent of the nominated acreage for the May auction was divided among Cody Exploration, Copperhead Corp., Diamond Resources, Dyer McCabe Professional Landman LLC, Globex Oil and Gas Corp., Keria R. Robertson, Larco Resources LLC, Oasis Petroleum North America and Petro-Hunt LLC.

In perspective

From 2004 through 2013, Trust Lands averaged 25,899 acres during the May quarterly lease auction, putting the 18,133 acres nominated for the May 2014 auction 30 percent below average. However, May 2014 nominations are 22 percent above the 14,816 acres that were leased in the May 2013 auction. The most acres leased in a May Trust Lands auction over the last 12 years were the 61,041 acres leased in May 2011.

In the May 2013 lease auction, 51 percent of the 14,816 leased acres were in the traditional Bakken core counties, and all were in Dunn, McKenzie and Mountrail counties. That is in contrast to the 19 percent nominated from the five core Bakken counties for the May 2014 auction.

The Trust Lands auction will be held on May 6 in the House chambers at the State Capitol in Bismarck beginning at 9 a.m. Central Daylight Time. A preliminary list of nominations is available at www.land.nd.gov/minerals/oilandgasleasing.

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