Chairman of Three Affiliated Tribes sees prosperity in oil

By Lauren Donovan
Bismarck Tribune

NEW TOWN, N.D. — The chairman of the Three Affiliated Tribes ducked over to a side table to sign $300,000 worth of oil and gas leases Tuesday, during an energy conference on the Fort Berthold Indian Reservation.

From where he sat, Chairman Marcus Wells Jr. could hear the bells and dings of hundreds of slot machines in the adjacent 4 Bears Casino.

The three-in-a-row lining up now - leases, active companies and possibly oil from the Bakken formation - could be just as lucky as any casino for the people on the reservation.

The checks represent a small share of the 200,000 mineral acres the tribe owns on the reservation where most of 900,000 mineral acres are allotted to tribal members under trust, or to private individuals on what are called “fee” acres inside the reservation boundary.

Wells sees a new day of prosperity, employment and independence for tribal members and a new source of revenue for health care, roads and other needs.

He sees a day where tribal members have enough money to qualify for home mortgages, make down payments, or even buy housing outright.

Wells said most of the reservation wasn’t explored for oil during the last boom because federal law required 100 percent of mineral owners sign leases. The law changed to 51 percent in 1997, making lease deals far more doable.

As of Tuesday, nearly half of the tribally owned and allotted acres were leased, and likely some similar portion of the private fee acres, though that number isn’t tracked by tribal administrators.

Things are moving fast, now, and in January the tribal council created an Energy Department to keep up with it, headed by Fred Fox.

An oil rig almost visible from the casino, not far from Clark’s Creek Bay on Lake Sakakawea, represents the first well on the west side of the reservation in nearly 60 years.

It’s also the first well on trust mineral acres.

Marathon Oil’s manager Terry Kovacevich said it took more than two and a half years to get from lease to well on the reservation, far longer than outside the reservation boundary.

Kovacevich said Marathon won’t know how much the well produces until July and then results will remain confidential for six months.

“It’s really exploratory on Fort Berthold,” he said. “There are not a lot of Bakken wells surrounding us. Geologically, there’s a good chance of success.” One of leases Wells signed Tuesday was for minerals under the Parshall town site, which would be tapped with a long horizontal leg from a well that could be two miles away.

Oil under Lake Sakakawea in the Bakken formation, 10,000 feet down, will be tapped the same way - sideways from a long way off.

Marathon moved one of its six rigs over to the reservation from Dunn County, on the other side of Lake Sakakawea, where it’s averaging about 200 to 300 barrels a day per Bakken well.

Kovacevich wouldn’t say how many acres it has leased on Fort Berthold, though its leases in Dunn County and on the reservation make up the majority of the 300,000 lease acres it has in the state.

Marathon has other permits pending for Fort Berthold and how fast and far development goes, depends on how the wells produce.

One thing that could simplify oil exploration on Fort Berthold is a tax agreement in negotiation between the tribal government and North Dakota.

Now, the tribe can’t tax oil on fee acres and both the tribes and the state tax oil on trust acres.

The agreement would streamline the two-tax system into one, have the state collect it and share it back to the tribes.

Ryan Bernstein, legal counsel for Gov. John Hoeven, said he hopes an agreement can be signed soon and Wells said the tribal council told their attorneys to finish their review by the end of this month.

Bernstein said a uniform tax rate could increase oil activity on the reservation and Kovacevich, of Marathon, said it would provide more economic certainty for oil companies.