More victims of housing investment scam file suit against Bismarck firm

BISMARCK – A second class-action lawsuit alleges that a Bismarck law firm shares liability for a Bakken housing Ponzi scheme that cost investors $62 million.

The latest complaint against Pearce & Durick filed in U.S. District Court names about 10 plaintiffs from various countries and alleges that the firm actively assisted North Dakota Developments in offering unregistered securities to the public.

In May, the U.S. Securities and Exchange Commission filed a civil complaint against North Dakota Developments and its owners, Robert L. Gavin and Daniel J. Hogan, alleging they had defrauded investors since 2012 for North Dakota oilfield housing projects that were never finished.

Pearce & Durick, the escrow agent for North Dakota Developments, distributed money from investors to developers according to stages outlined in an agreement.

The court complaint says the firm dispersed money early without verifying that the milestones, such as the manufacturing or installation of modular units, had been met.

“I think Pearce & Durick is fooling themselves if they think they have no liability,” said attorney Joshua Kons of Connecticut, one of the attorneys representing investors. “They were negligent, they breached their fiduciary duties and they definitely participated in these transactions.”

Richard Thomas, an Arden Hills, Minn., attorney representing the Bismarck firm, said the firm denies that it did anything improper.

“Pearce & Durick has been victimized by these same developers who were victimizing these investors,” Thomas said. “Everything that is alleged in the complaint results from the fact that developers were misleading us and misinforming us about the status of events, upon which we relied.”

The complaint names about 10 plaintiffs from countries including the United Kingdom and Australia, but Kons said the case could cover everyone who invested with North Dakota Developments.

Investigative records indicate 980 investors from 66 countries invested more than $62 million in North Dakota Developments, according to the North Dakota Securities Department.

“Many of these people were lured in through various online marketing websites and portals which touted the virtues of investing in these man camps and how they offered very high returns for low risk,” Kons said.

A separate class action complaint filed last month makes similar allegations but defines the plaintiffs as investors who paid legal fees to Pearce & Durick.

Thomas said it will be up to a judge to decide how to proceed with the two cases, but typically a judge would want the plaintiffs’ attorneys “to decide who’s going to sail the ship.”

“You can’t have two competing class actions at the same time. It doesn’t make any sense,” Thomas said.

Both cases are assigned to U.S. District Court Judge Ralph Erickson.

Keystone XL veto coming, sources tell N.D. senator

WASHINGTON – U.S. Sen. John Hoeven said Wednesday he’s been told by sources that President Barack Obama plans to veto the Keystone XL pipeline after Congress goes into recess in August.

Obama’s previous strategy had been to defeat the Keystone XL through endless delays, said Hoeven, R-N.D., but now a decision is anticipated before the end of his term.

“That changed here recently and the people we’ve been talking to indicate he’ll actually turn the project down in August after we go into recess,” Hoeven said in an interview with Forum News Service. “It’s an opportunity for him to do it more under the radar.”

Hoeven, who talked about the president’s anticipated veto on the Senate floor this week, said the issue has received a lot of reaction, particularly because the development comes at a time when Obama is proposing to lift sanctions on Iran.

“So in essence he’s making it easier for Iran to produce more oil and he’s making it harder for us to produce oil here in the United States and harder for our allies in Canada,” Hoeven said. “It’s raised a very valid, broader issue of not just energy security but how the administration treats our allies and how it treats our opponents.”

A decision on whether to approve TransCanada Corp.’s Keystone XL has been delayed for more than six years. The proposed pipeline would connect Canada’s oil sands to Gulf Coast refineries, with an on-ramp in Baker, Mont., to also transport Bakken crude. The pipeline requires federal approval because it crosses an international border.

Hoeven said if Obama vetoes the pipeline, he’d work to attach the Keystone XL to other energy legislation this fall.

The White House on Wednesday declined to provide an update on the review of the proposed Keystone XL pipeline, saying the U.S. State Department was handling that process, Reuters reported.

Also Wednesday, Canadian Prime Minister Stephen Harper told Bloomberg Television he was not hopeful that Obama would approve the northern leg of Keystone XL pipeline.

“A positive decision has not been rendered for a very long time and that’s obviously not a hopeful sign,” Harper said, referring to what he called “the very peculiar politics of this particular administration.”

Harper also said if Obama does veto the project, he’s confident a future U.S. administration would grant approval.

Oil company gives $5 million for housing

Tim McIlwain, senior vice president of XTO Energy, announces a $5 million contribution to the Housing Incentive Fund on Monday, July 27, 2015, in Williston, N.D. Gov. Jack Dalrymple and Jolene Kline, executive director of the North Dakota Housing Finance Agency, also participated in the event. Amy Dalrymple/Forum News Service

Tim McIlwain, senior vice president of XTO Energy, announces a $5 million contribution to the Housing Incentive Fund on Monday, July 27, 2015, in Williston, N.D. Gov. Jack Dalrymple and Jolene Kline, executive director of the North Dakota Housing Finance Agency, also participated in the event. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – XTO Energy announced Monday a $5 million donation that will help provide affordable housing for teachers, police and other essential personnel in three of the state’s busiest oil communities.

The oil company’s contribution to North Dakota’s Housing Incentive Fund will support four housing projects in Williston, Watford City and Killdeer. Half of the 287 multi-family units are targeted for low-income residents or employees of cities, counties, medical facilities, school districts or law enforcement.

XTO, a subsidiary of ExxonMobil with more than 100 employees in North Dakota, selected which housing projects would receive the funds.

“This initiative will provide housing assistance where it’s needed most,” Tim McIlwain, senior vice president for XTO, said Monday during a check presentation in Williston.

XTO is now the largest contributor to the Housing Incentive Fund, a program created in the 2011 legislative session that provides low-cost financing to developers of affordable multi-family housing. Individuals and businesses who contribute to the fund receive a dollar-for-dollar state income tax credit.

Gov. Jack Dalrymple, who attended the event Monday, noted that the communities receiving the funds are some of the fastest growing in the nation.

“You can’t keep up with that pace of growth unless you make it possible for people to stay in their community, continue to live there, even if they’re not making a high salary thanks to our boom in oil and gas,” Dalrymple said.

In Watford City, there continues to be a shortage of affordable housing for teachers, said Katie Walters, property manager of the Wolf Run Village II project, one of the projects benefiting from the funds.

Walters said monthly rent of $1,600 for a one-bedroom apartment is the most affordable permanent housing she’s aware of in Watford City.

“Rent is starting to come down a little bit, but it’s still out of reach for essential workers,” Walters said.

Affordable housing continues to be key for recruiting firefighters and paramedics to Williston, said Williston Fire Chief Jason Catrambone. One of his employees recently moved into a housing unit supported by a previous Housing Incentive Fund grant, he said.

Legislators authorized $30 million in income tax credits for the fund for the 2015-17 biennium.

To date, $10.7 million has been raised, said Jolene Kline, executive director for the North Dakota Housing Finance Agency, which administers the fund.

The funds from XTO will support four townhomes in Killdeer, all for city employees. The other projects selected are Wolf Run Village II, 20 units, Watford City Apartments, 77 units, and Williston Station Apartments, 186 units.

The proposed monthly rents for the projects range from $375 for low-income residents to between $900 and $1,575 for essential workers, Kline said. The projects have a 15-year rent restriction, so residents of the affordable units will have stable prices, she said. Other units in the building will be market rents.

Faces of the Boom: Social worker out to fill gaps in Oil Patch care

Skye Albert, pictured Friday, July 24, 2015, in Crosby, N.D., works as a social worker for Divide County. Albert is a recent University of North Dakota graduate who benefited from a grant program that aims to alleviate the need for child welfare workers in the Oil Patch. Amy Dalrymple/Forum News Service

Skye Albert, pictured Friday, July 24, 2015, in Crosby, N.D., works as a social worker for Divide County. Albert is a recent University of North Dakota graduate who benefited from a grant program that aims to alleviate the need for child welfare workers in the Oil Patch. Amy Dalrymple/Forum News Service

CROSBY, N.D. – A recent University of North Dakota graduate is helping fill a shortage of social workers in the Oil Patch, and now she hopes other students will join her.

Skye Albert, who works as a social worker in Divide County, is the first UND graduate to benefit from a grant program designed to fill a need for child welfare workers in oil-producing counties.

Albert, who has lived in Crosby for more than one year, enjoys the variety she gets working for a rural agency.

“It’s nice because going in I knew I was going to be able to do everything,” said Albert, 23, a native of Wyoming. “I’m going to walk away from this job with so much experience.”

Oil development has fueled rapid population growth in western North Dakota, but many communities have struggled to recruit and retain enough social workers to assist with the rising caseload.

Sam Pulvermacher, director of social services for Divide County, had been the sole social worker in the county for about a year when Albert was hired.

“That was chaotic,” Pulvermacher said.

Now the agency has more resources, including someone who took over Divide County’s child-protective services cases along with cases in two other neighboring counties.

But the region continues to have a shortage of social workers, which is what the grant program aims to alleviate, said Carenlee Barkdull, chairwoman of UND’s social work department.

“We’re hoping to help make a dent,” Barkdull said.

The $735,000 grant, awarded by the U.S. Children’s Bureau, helped Albert pay for her education and provided her a stipend during her internship with Divide County.

Students who are selected to be part of the program through a competitive process commit to work in oil-impacted or underserved counties for at least one year. The highest-priority communities are Divide, Dunn, McKenzie, Mountrail, Stark, Ward and Williams counties, along with the Fort Berthold Indian Reservation and the Standing Rock Indian Reservation.

In addition to Albert, there are 10 students in the program now, with a goal of placing 18 to 22 students in western North Dakota through the life of the five-year grant, Barkdull said.

“The response has been great,” Barkdull said. “The students have been stellar, highly qualified, highly committed.”

As the first graduate of the program, Albert is now being tapped to help develop a mentorship program to support other graduates.

One of the challenges Albert sees working in a rural area is a lack of services in the immediate area. For example, Crosby didn’t have therapy services when she first started her job, other than someone who drove from Williston once a week.

For people with addiction issues, they need to travel to Williston or Minot to get an evaluation, and it can sometimes take months to get through the wait list, Albert said.

“It seems like everything you’re asking families to travel for. The expense of that alone, it’s kind of unrealistic,” Albert said. “We have to think outside the box. What can we do instead of that?”

The students need to be prepared for the challenges they may face working in rural communities, Barkdull said.

For Albert, getting involved in the local community was key to adjusting to her new life in Crosby. She helped plan the county fair as a member of the fair board and joined the volunteer fire department.

“She really does exemplify the kind of spirit we want to see in our students, wanting to make a difference,” Barkdull said.

City of Ray says U.S. senator doesn’t have all the facts in labeling project a waste

RAY, N.D. – U.S. Sen. Rand Paul of Kentucky blasted the northwestern North Dakota town of Ray this week for a sewer lagoon expansion he called a “costly gamble,” but a city official says the Republican senator failed to get all the facts.

Paul features Ray in “The Waste Report,” which aims to highlight egregious examples of waste within the U.S. government, for its recent sewer expansion to meet projected population growth that has not materialized.

Paul cites Rob Port from the Say Anything Blog, who has reported on his blog and on that the city of Ray was “running short on poop” and having to accept waste from outside sources to keep its facility operating.

“A little town made a big gamble and is now importing sewage,” writes Paul, who is running for president. “Kind of a funny story; that is, until you learn that the federal taxpayer footed much of the bill for the sewer upgrade.”

Ray City Commissioner Richard Liesener said Paul doesn’t have the full story and defended the city’s actions.

“I’m disappointed in Rand Paul’s office not contacting us to get all of the facts,” Liesener said. “I don’t understand somebody putting all of their fact basis on a blogger. I would certainly welcome Rand Paul’s office to contact the city directly, myself if he’d like.”

Ray received $2.5 million in federal low-interest loans from the Environmental Protection Agency’s Clean Water State Revolving Fund Program for the project.

The funding package included $760,000 in loan forgiveness, so the city will need to repay about $1.7 million plus interest, said Wayne Kern with the North Dakota Department of Health, which administers the fund with the North Dakota Public Finance Authority.

Paul questions how the project got approved.

“Ray and the state seemed to have gotten caught up in the excitement of a boom and missed the forest for the trees,” Paul writes.

The city of Ray had grown from a population of 592 in the 2010 Census to about 1,000 by 2012, said Ray city engineer Lonni Fleck.

In 2012, the city’s sewer capacity was maxed out, forcing leaders to put a moratorium on new development until infrastructure could be expanded.

A comprehensive plan developed for Ray by CTA of Red Lodge, Mont., estimated that Ray would grow to 3,500 people by 2020. The plan does not provide details about how the firm arrived at that estimate. Associate Brent Moore said the estimate reflects the “ability and the desire of the city to support new growth.”

In addition to population estimates, the city was receiving phone calls and applications related to future developments “in a seemingly never-ending stream,” Fleck said.

To accommodate the growth, construction of two additional wastewater ponds began in 2012 and was complete in 2014.

“However, by this time, economic conditions in the oil and gas industry and other factors caused developers to enter a holding pattern resulting in lower-than-anticipated wastewater flows,” Fleck said.

The most recent Census estimate for Ray was 751 people in 2014, but Census data doesn’t include temporary workers.

The city needed 25 million gallons of wastewater for an initial fill of the two new ponds. The city chose to accept waste from outside sources on a temporary basis to prevent adding costs to taxpayers, Fleck said.

The city of Ray suspended accepting outside waste after it completed repairs to the city well, which can provide fluids to the lagoon ponds, Fleck said. If the city’s population does not increase, Ray officials may again look to outside sources to supplement daily wastewater flows, she said.

Liesener said officials acted in the best interest of the city with the best information they had available, but it would take a crystal ball to accurately predict the population growth.

“If Rand Paul can tell me what the price of oil is going to be, I’ll tell him what the population will be,” Liesener said.

Kern, director of Municipal Facilities for the health department, also defended the city of Ray and said the city was deserving of the loan forgiveness funds. Kern said it’s not fair to second-guess the project one year into it when it was designed to accommodate future growth for 10 to 20 years.

If Ray had tried to expand its sewer capacity in phases, that would have ended up costing more in the long run, Kern said.

“You go with the best information you have at the time to move forward,” Kern said. “In 2010 to 2012, that was very intense planning for many communities. They had to make quick decisions to plan ahead because everything was coming at them so fast, the buildout was coming so fast.”


Lawsuit alleges Bismarck firm had role in Ponzi scheme

BISMARCK – More than 100 investors from around the world have joined a class action lawsuit alleging that a Bismarck law firm played a role in a Ponzi scheme that bilked people out of $62 million.

A complaint filed in U.S. District Court alleges that the Pearce & Durick law firm, which was the escrow agent for North Dakota Developments LLC, committed legal malpractice by failing to advise investors they were investing in unlawful securities.

In May, the U.S. Securities and Exchange Commission filed a civil complaint against North Dakota Developments and its owners, Robert L. Gavin and Daniel J. Hogan, alleging they had defrauded investors since 2012 for North Dakota oilfield housing projects that were never finished.

Investigative records indicate 980 investors from 66 countries invested more than $62 million in North Dakota Developments, according to the North Dakota Securities Department.

Investors thought they were buying an interest in housing for oil workers in the booming Bakken region, but the high returns they were promised never materialized and the developers are accused of misusing investor money.

The class action case alleges that investors were required to pay legal fees to the Pearce & Durick firm for review of documents related to the investment deals.

That formed an attorney-client relationship between the firm and the investors, the lawsuit alleges, and the firm should have advised investors they were investing in unlawful securities.

“We think they should have alerted investors about a number of pretty serious red flags or outright violations,” said securities lawyer Alan Rosca of Cleveland, one of several lawyers representing the investors.

But the firm denies that it represented the investors, and made that fact clear to investors when they signed their purchase agreements, said attorney Richard Thomas, who represents both the firm and Bismarck attorney Jonathan Sanstead, who is named in the case.

The firm’s role as escrow agent was to distribute money from investors to the developer according to stages outlined in the escrow agreement, Thomas said.

If the allegations against North Dakota Developments are true, the developers misled the law firm about meeting those stages, Thomas said.

Thomas said the lawsuit is a consequence of the defrauded investors seeking recovery.

“We have now become a target. We don’t believe that that action and activity is justified by the actual facts,” said Thomas, of Arden Hills, Minn. “A lot of people were misled, including the firm, if the allegations against the principals prove true.”

The firm has not yet filed an answer to the legal complaint.

Several investors from Singapore are named in the class action complaint, but the case has grown to include more than 100 investors from several countries, Rosca said.

The attorneys, which include co-counsel Mac Schneider of Grand Forks, are talking to 250 to 300 more potential clients from around the world, Rosca said. Many lost between $50,000 and $100,000 while others lost a few hundred thousand, Rosca said.

“You hear some really sad stories,” Rosca said. “Life savings that are gone and medical situations that they can’t take care of because the money is gone. It’s really sad.”

Rosca said the class action case does not allege any fraud or knowing misconduct by the firm or Sanstead, a former partner with the firm.

“The court will decide who’s liable and for what,” Rosca said. “I don’t think the firm did anything intentionally wrong.”

Additional class action cases are possible. The investors’ attorneys are still reviewing evidence and may file lawsuits against additional defendants, said Rosca, whose practice specializes in representing defrauded investors.

“Schemes of this size, you can hardly perpetrate them alone,” Rosca said. “Once you get above a certain amount, you really need a lot of professional infrastructure, for lack of a better term.”

Meanwhile, the company that provides malpractice insurance for Pearce & Durick has filed its own lawsuit against the firm and Sanstead.

ALPS Property & Casualty Insurance Co. is asking the court to rule that it doesn’t have a duty to cover claims against the firm and Sanstead.

Sanstead denies the allegations in that case and has cooperated fully with the Securities and Exchange Commission investigation, said attorney Tim Purdon, who is representing Sanstead in the insurance coverage case.

Sanstead is no longer with the firm and has started his own practice, Purdon said.

“His reputation speaks for itself in the legal community,” Purdon said.

Phillip Cole, a Minneapolis attorney representing Pearce & Durick in the insurance coverage case, said the firm did not profit from the situation.

“They were a victim, just like these investors, I’m afraid,” Cole said.


Housing project tied to Ponzi scheme to stay closed

ALEXANDER, N.D. – An oilfield housing camp developed by two men accused of defrauding investors in a $62 million Ponzi scheme will likely remain closed.

The Great American Lodge near Alexander, which is owned by North Dakota Developments LLC, closed abruptly in May after the utility company cut power to the facility because of unpaid bills.

The closure occurred days after the U.S. Securities and Exchange Commission filed a civil complaint against North Dakota Developments and its owners, Robert L. Gavin and Daniel J. Hogan, alleging they had defrauded investors since 2012 for Bakken housing projects that were never finished.

The Great American Lodge, which was partially completed, was the only North Dakota Developments project that was operational.

A receiver appointed to protect assets involved in the case said costs to reopen the lodge would be substantial and he doesn’t think it would be financially feasible.

Gary Hansen, the appointed receiver, wrote in a status report filed in U.S. District Court that water was being trucked onto the site every few days at a considerable cost, because of an issue with water lines.

In addition, the facility has outstanding bills totaling more than $900,000 and that total is likely to grow, Hansen wrote. The receiver’s review so far has identified about $175,000 in liquid assets for North Dakota Developments.

The Great American Lodge, which is between Watford City and Alexander, has a building with food services and laundry facilities, 430 housing units available for rent and 70 more units under construction, Hansen wrote.

It housed about 160 people, including 18 employees of the lodge, when it abruptly closed, said Darrell Pullen, who managed the camp until early February.

Some of the displaced residents found housing in the area, but many had to move to Grassy Butte or Williston to find affordable housing and are now having to commute farther to work, Pullen said.

“It’s affected a lot of people,” he said.

Pullen said he hoped the lodge would reopen, and he gets calls every day from people who would like to purchase it.

“We did so much work there, I hate to see it abandoned like it is,” Pullen said.

Hansen also reviewed the other housing projects that were sold to investors:

— Great American Lodge, Culbertson, Mont.: That site was not operational, but has about 132 housing units that are partially complete. North Dakota Developments attempted to get a certificate of occupancy for 44 of the units in the spring of 2015, but failed the required inspection.

— Transhudson, Parshall: The lodge construction site had been inactive for an extended period of time. It was at the ground-leveling phase only with two construction trailers and no buildings on site.

— Great American Lodge – Watford City East: Government officials did not approve the project and construction did not begin at the site.

New TrainND facility now open in Williston

A new TrainND Northwest facility is complete in Williston, N.D., to provide workforce training for oil and gas companies and other industries Amy Dalrymple/Forum News Service

A new TrainND Northwest facility is complete in Williston, N.D., to provide workforce training for oil and gas companies and other industries Amy Dalrymple/Forum News Service

WILLISTON, N.D. – A new $7.5 million workforce training facility in Williston is complete, filling a demand for oil industry training that remains strong despite a slowdown in drilling.

The new building for TrainND’s Northwest Center at Williston State College brings the classroom training together with its petroleum simulators and field program, which features a workover rig and other oilfield equipment.

“We don’t want our instruction to just be classroom stuff,” said CEO Deanette Piesek. “We really think it’s so important because there’s so many people coming to Williston that have never been in the oilfield that they actually get to see some of the equipment.”

The workforce training program has seen a drop in participants along with the decline in oil activity, but it hasn’t been as significant as some had projected, Piesek said.

For the 2014-15 school year, TrainND in Williston provided training to more than 320 businesses and 14,000 participants, including some who took more than one training course.

That represented a drop in enrollment of about 2,000 people from a year ago, but enrollment was higher than in 2012-13, Piesek said.

Many companies in northwest North Dakota are trying to keep their good employees during the downturn and are using the slow time as an opportunity to take refresher courses or update safety certifications, Piesek said.

“Instead of having them sitting around, they’re upgrading their training,” she said.

Nearly three-fourths of the workforce training the Williston program provides is for the oil and gas industry. The next largest programs are transportation and health care fields.

With the new 19,740-square-foot training and educational center, TrainND will have more space to diversify and expand its programs, Piesek said.

Andy Reeves, who teaches several safety courses for the oil industry, said the new facility will help the program better accommodate companies that are starting to request more specialized training courses.

Piesek said she’s excited that TrainND is still getting requests to train new oil industry hires. Halliburton requested two classes for new hires this summer and is scheduling a few more in the coming months, Piesek said.

“It’s a strong sign when you see companies hiring again,” Piesek said.

TrainND plans to begin offering classes at the new facility on Aug. 17.

The oil industry donated $1 million toward the building. Other funding sources included $750,000 from the city of Williston’s STAR Fund and a $2.5 million loan from the Bank of North Dakota.

Pipeline flags becoming problem for western North Dakota landowners

Rancher Vawnita Best holds a pipeline flag on Monday, June 22, 2014, in a hay field south of Watford City, N.D. If the flags aren't removed, the metal can get chopped up into hay bales, which Best says has killed three of her cows in recent years. Amy Dalrymple/Forum News Service

Rancher Vawnita Best holds a pipeline flag on Monday, June 22, 2014, in a hay field south of Watford City, N.D. If the flags aren’t removed, the metal can get chopped up into hay bales, which Best says has killed three of her cows in recent years. Amy Dalrymple/Forum News Service

WATFORD CITY, N.D. – As more and more pipelines criss-cross western North Dakota, flags that mark the underground utilities are becoming more than a nuisance for landowners.

Metal pin flags used to mark the pipelines so excavators can safely work in the area are often left behind, creating hazards for cattle when the metal winds up in hay bales.

“They are everywhere out here,” said McKenzie County rancher Vawnita Best. “It looks like a confetti plant blew up.”

It’s the excavator’s responsibility to remove pipeline flags or other markings after an excavation is complete, said Ryan Schmaltz, public relations director for North Dakota One Call, which manages the “call before you dig” 811 line.

A law change that the Northwest Landowners Association advocated for during the past session aims to remove some gray area with the requirement.

Currently, the law says excavators need to remove pipeline flags or other markings “when possible,” but after Aug. 1 the requirement will be to remove the markings “upon completion of the excavation.”

For farmers and ranchers in western North Dakota, finding flags abandoned in their fields is more than a headache.

Dr. Bruce Pedersen with the Watford City Veterinary Center said cattle are at risk of getting hardware disease if the metal flags get into hay bales.

While Pedersen said he’s not aware of tests that have confirmed that pipeline flags have harmed cattle, the metal poses a significant risk that will grow as the number of pipelines increases.

“I think it’s enough of an issue that it should be addressed,” Pedersen said.

Best said she believes she’s lost three cattle in the past two years as a result of eating the metal.

In addition, farmers have reported damage to their equipment from running over the flags, said Troy Coons, chairman of the Northwest Landowners.

The North Dakota Public Service Commission is working to raise awareness that the flags need to be removed promptly.

“It is very clear, it’s the excavator’s responsibility,” said Commissioner Brian Kalk.

But finding the responsible party, particularly in western North Dakota where there’s a lot of construction activity, isn’t always easy.

Best recently spent four hours on the phone trying to find who was responsible for flags marking a natural gas pipeline that had been left behind in her hay field. She ended up removing them herself after getting the OK from North Dakota One Call, paying a relative to cut her hay while she handled the flags.

“Nobody picks any of that stuff up,” said Best, also a McKenzie County Commissioner.

If the pipeline markers sit in a field long enough, the flags can blow away and then the metal is even harder to find.

Daryl Dukart, a Dunn County commissioner, said he’s seen some pipeline markers in his area for as long as two years.

Kalk said the issue also affects people in urban areas of the state. He’s also working with a downtown Fargo business owner to get markings on a sidewalk removed.

“If people have concerns, they’ve got to let us know,” Kalk said.

Schmaltz said he can help landowners track down the responsible party if they have a location of the utility markings and the estimated timeframe they appeared. Landowners can contact Schmaltz at (701) 751-1019 or

If landowners continue to have issues, they can file a complaint with the Public Service Commission through

Dukart said he thinks the best approach is for landowners to give workers a friendly reminder to clean up after themselves.

“Right now I don’t know how you could put enough people out here to try and regulate it,” Dukart said.


May oil production up as companies become more efficient

WILLISTON, N.D. – Oil companies are drilling faster and focusing on core areas of the Bakken, leading to a surprise increase in North Dakota oil production in May, the state’s top regulator said Friday.

The state produced 1.2 million barrels of oil per day in May, a 2.7 percent increase despite a continued slowdown in oil activity, preliminary figures show.

Director of Mineral Resources Lynn Helms said although the number of drilling rigs operating in the state – 73 on Friday – is the lowest since November 2009, the rigs that remain are twice as efficient as they were two years ago.

In addition, operators are focusing on the core areas of the Bakken and Three Forks, which is boosting the initial production rates of new wells, Helms said.

While the rig count has dropped 67 percent, the drop in applications for drilling permits has dropped 48 percent, Helms said.

“Companies are still really optimistic about Bakken drilling, it’s just more a matter of when, not if,” Helms said.

At the end of May, North Dakota had an estimated 925 wells waiting on hydraulic fracturing crews, the same as the end of April.

Helms anticipates companies will continue to hold off fracking most wells until the West Texas Intermediate oil price is at $65 a barrel, or possibly $60 if fracking costs continue to decrease.

Drilling rigs are expected to return in a significant way when the price hits $70 a barrel, Helms said.

The price for WTI crude was $52.80 a barrel on Friday, according to Bloomberg.

Oil production stayed flat on the Fort Berthold Indian Reservation in May. Helms said the reservation has seen a more significant drop in rig count and well completions due to uncertainty about changes going on with the tribe’s oil regulations.

Natural gas production increased 6.4 percent to an average of 1.6 billion cubic feet per day, a new all-time high, according to the preliminary figures.

The percentage of natural gas flared remained unchanged since April at 18 percent.

However, the volume of natural gas flared increased 23.5 million cubic feet per day since April to 293 million cubic feet per day, Helms said.

About 52 percent of North Dakota oil was transported by rail in May, a drop of 2 percent since April, said Justin Kringstad, director of the North Dakota Pipeline Authority.