ND oil royalties-sharing proposal defeated

Associated Press

BISMARCK, N.D. (AP) — The North Dakota Senate on Friday rejected legislation that would have required oil producers to share the wealth with landowners when oil is tapped from beneath their property.

The Senate voted 40-6 against the bill that would have given the landowners within an oil well's drilling unit a share of royalty payments from its production. A common drilling unit is 1,280 acres, or 2 square miles.

Critics of the proposal said it would disrupt agreements between royalty owners and oil producers, and described it as a taking of property without compensation. "We cannot take from one and give to another," said Sen. Stan Lyson, R-Williston.

In western North Dakota's oil country, it is common for the property's surface and the mineral rights beneath it to be owned by different people. In those cases, the owner of the property's surface is obliged to allow access for oil drilling, even though the owner has no claim to payments from any production.

"What he has to look forward to is his road being destroyed, being surrounded by dust that smothers and destroys crops and livestock," said Sen. John Andrist, R-Crosby, the sponsor of the defeated legislation. "There is no remuneration for this."

Soaring oil production and drilling activity is causing increasing friction between owners of surface property rights and the land's mineral rights, Andrist said.

"This is not a problem that's going to go away. We're adding about 150 new wells every month in the oil patch right now, and surface owner concerns are really going to be a hot-button issue," Andrist said.

Sen. Randy Christmann, R-Hazen, said the Senate's rejection of the legislation should not be read as being insensitive to a surface landowner's concerns.

"Our laws give all the negotiating power to the mineral owners, and zero negotiating power to the surface owners . That is not a fair environment for them to be in," Christmann said. "I think we need a solution. I don't know what it is. I don't think this (bill) is it."

The bill is SB2131.