The process of refunding contested royalty payments now being held in escrow because of the Ordinary High Water Mark could drag out for years if there are disputes on the valuation. Leases on more than 96,000 acres are involved.
ND State Land Commissioner Jodi Smith estimates the refunding could start in September as the state taps into over $200 million now being held in escrow by the Bank of North Dakota.
SB 2134 is the original legislation passed in 2017 authorizing the refund.
What could delay the payout is the fact that oil companies could question the valuation and those discussions could be protracted for some time or end up in litigation, Smith said.
She expects the analysis now being done by KLJ under a $1,088,635 contract, which is identifying quarter section designations above and below the OHWM on the Wenck Associates study done for the ND Industrial Commission, will be finished by July.
At the same time Mineral Tracker, LLC of Watford City is wrapping up a $215,000 contract to determine the mineral value of 8,000 leases on 2.6 million acres held by ND Dept. of Trust Lands. The evaluation is “complicated by the sheer size, variance and geological aspects and topography,” Smith said.
“For any undeveloped mineral acreage in which oil and gas reserves are prospective but unproven, market rate conversions related to the recent leasing bonus payments should be employed,” Smith said.
LAKE SAKAKAWEA MINERAL GRAB EXPANDED AND CRITICIZED
The three men who filed highly criticized mineral claims under Lake Sakakawea have expanded their filings to include dozens more sections from Trenton to Fort Berthold as a leading attorney questioned the action.
“This reeks of desperation without any legal or factual support,” said Fargo attorney Josh Swanson. “They have zero interest in these minerals and all they are doing is mucking things up. This is an 11th hour issue and it is absurd and ridiculous.”
Swanson represents mineral owners in the Wilkinson dispute where they received favorable court rulings on 286 acres near Williston. They are among mineral owners waiting for state refunds.
The mineral ownership claims are filed by Paul Sorum of Fargo, Rep. Marvin Nelson of Rolla and Michael Coachman of Larimore.
By filing those claims, some mineral owners believe if the Sorum group loses its case pending before the ND State Supreme Court, it could delay the release of royalty refunds authorized by state legislators in SB 2134.
More than $200 million sits in escrow in the Bank of North Dakota and other banks that would be refunded if the Supreme Court rejects the contention by the Sorum group that legislators have no right to pay for those minerals that were originally claimed by the ND Dept. of Trust Lands.
In an interview with the Oil Patch Hotline earlier this month, Sorum believes the Supreme Court will reject his case and Nelson refused to discuss it.
Swanson hopes oil producers will challenge the Sorum group mineral grab. “This a cavalier disregard that Sorum and Nelson have shown these mineral owners,”
Swanson said. “It is disappointing they want to make a claim.”
Rep. Kelly Armstrong, who is now a congressman and was a state senator and sponsor of SB, is urging legal action against the Sorum group.
“I hope someone files a slander of title against them,” Armstrong said, after he pointed out they do not have a direct relationship to these minerals. “They filed this for themselves and not for the people.”