Radioactive waste on the N.D. monitor

Posted on May 18, 2013 by Amy Dalrymple

Eric Olson, operator at the Williston landfill, holds up one of an estimated 100 filter socks containing radioactive material that were improperly disposed of in a city of Williston garbage container on Thursday, May 16, 2013. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – Landfill employees here discovered at least two “hot loads” this week, illustrating why a group of North Dakota citizens is worried about the proper disposal of radioactive waste that comes with oil production.

A Williston landfill operator found an estimated 100 filter socks Thursday containing naturally occurring radioactive material. The socks, which look like large tube socks and are used in oilfield salt water disposal wells to filter out the solids, should have been transported out of state but instead were hidden in a city garbage can.

The discovery came a day after the Williston landfill issued a $10,000 fine to a company that illegally brought about 50 filter socks to the landfill, said landfill foreman Brad Septka.

“We’re trying to do everything in our power to catch them,” Septka said.

A newly formed group called the Energy Industry Waste Coalition will meet Sunday in Minot to discuss concerns about radioactive oilfield waste and efforts to influence public policy.

Darrell Dorgan of Bismarck, who helped organize the group, said members worry about what happens to the radioactive material after landfills reject it.

“What’s happening is it’s just being scattered out here in the wind,” said Dorgan, owner of Dakom Communications who reported on radioactive waste in the 1980s while working as a broadcast journalist.

The naturally occurring radioactive material, referred to by the acronym NORM, is brought to the surface as a result of drilling and other oil production activities, said Dan Harman, manager of radiation control and indoor air quality branch with the North Dakota Department of Health.

The material can be found in oilfield waste, such as drill cuttings or tank sludge, Harman said. NORM is commonly found in filter socks, Harman said.

Currently, only low-level radioactive waste can be legally disposed of in North Dakota and the rest must be shipped to approved sites in Colorado, Michigan, Texas and other states.

The North Dakota Petroleum Council, an oil industry group, would like to develop a solution to safely handle the material within the state, said president Ron Ness.

The council is working with the Department of Health and the Energy and Environmental and Research Center at the University of North Dakota to study the issue.

“Unfortunately, if the only disposal options are out of state, I think that creates a bad environment for people to try to sneak bags of it into landfills,” said John Harju, associate director for research with the EERC. “People don’t know what to do with it.”

The first steps of the EERC study, which is expected to begin in the next few weeks, include getting a handle on the nature of the material in North Dakota and understanding it in the context of radioactivity that people are exposed to every day, Harju said.

“We need to get these things into some perspective,” Harju said.

For a comparison, Harman said a worker would have to stand 6 inches from bags of ceramic frac sand for 2,000 hours to get the same dosage of radiation as one dental X-ray.

North Dakota does not accept radioactive waste with levels greater than 5 picocuries per gram, which Harju called “amazingly low radiation.”

Other states accept waste with higher levels, some as much as 10 times higher, Harman said.

When North Dakota officials have asked other states how they determined the rates, most based their answers on what other states did rather than relying on science, Harman said.

The Department of Health has asked the Petroleum Council to bring a science-based proposal that would be open to public comment, Harman said.

Dorgan said he worries that if North Dakota increases the level of radiation it will accept and other states lower theirs, North Dakota could become a destination for the waste.

“We could end up as the dump site,” Dorgan said.

Brad Septka, landfill foreman for the city of Williston, N.D., pictured Thursday, May 16, 2013, has had to crack down on companies that try to illegally dispose of radioactive waste. Amy Dalrymple/Forum News Service

The Williston landfill already has taken steps to prevent becoming a radioactive wasteland.

Septka said the landfill increased fines for bringing in the waste from $1,000 to $10,000. Scale operators use Geiger counters to check every oilfield load and employees give drivers a list of oilfield waste management facilities.

“There’s no reason for it to come to the landfills,” Septka said.

The companies that receive the fines usually claim they didn’t know the items were there, but Septka said the waste often appears like it was hidden.

In 2011, the Williston landfill did its own testing on two filter socks and found that one had a radiation level of 17 picocuries per gram and another had a level of 45 picocuries per gram, Septka said.

The Department of Health now receives information about every load that is rejected at a landfill and follows up to see where the waste goes, Harman said.

In addition to reports from landfills, Harman said there was a confirmed case of a sack of filter socks discovered west of Tioga along U.S. Highway 2 this spring after the snow melted that appeared to have blown off a truck, Harman said.

Edmund Baker, environmental director for the Three Affiliated Tribes, issued a warning to tribal members early this year about radioactive waste, particularly filter socks that he said can resemble fishing nets.

“There’s a risk of children looking at these things not knowing what they are,” Baker said.

During the recent clean-up days on the Fort Berthold Reservation, volunteers found an estimated 30 filter socks, with a third of those concentrated around the Mandaree area, Baker said.

Baker said he’s working with the Environmental Protection Agency and watching what the Health Department does regarding disposal.

Don Morrison, executive director of the Dakota Resource Council, which is also involved with the newly formed coalition, said the group is getting organized to make sure the public has input on policy changes the state would make about radioactive waste.

The coalition will strongly oppose new sites for radioactive storage and increasing the level of radioactivity of material that can be kept in North Dakota, Morrison said.

“It’s time for North Dakotans to have a voice in deciding what’s going to happen,” Morrison said.

Eric Olson, operator at the Williston landfill, sets aside a bag of filter socks containing radioactive material on Thursday, May 16, 2013, to be disposed of properly. Amy Dalrymple/Forum News Service

Oil companies continue Pick Up the Patch campaign

Posted on May 16, 2013 by Amy Dalrymple

Volunteers clean up a ditch near Dickinson, N.D., this spring. Photo courtesy of North Dakota Petroleum Council

TIOGA, N.D. — Volunteers from oil and gas companies will clean up litter from roadways in Tioga today, continuing the North Dakota Petroleum Council’s Pick Up the Patch initiative that has already involved 500 employees this spring.

Dozens of energy companies have helped pick up more than 900 bags of trash and clean 20 miles of roadway in western North Dakota during the past four weeks. Cleanup efforts have been held in New Town, Williston and Dickinson.

Today’s event focuses on the Tioga area and an event Friday focuses on the Minot area.

The North Dakota Petroleum Council launched the campaign last spring to clean up debris left behind after the snow melted. Last year, more than 70 companies and 1,000 volunteers picked up more than 200 miles of roadways.

Helms: Keystone XL would save lives

Posted on May 15, 2013 by Amy Dalrymple

Lynn Helms, director of the North Dakota Department of Mineral Resources, testifies Tuesday, May 7, 2013, to the U.S. House Committee on Science, Space and Technology. Photo courtesy of Matt Becker

BISMARCK – The Keystone XL Pipeline could mean three to six fewer traffic deaths per year in North Dakota as a result of reduced truck traffic, the state’s top oil and gas regulator says.

Lynn Helms, director of the Department of Mineral Resources, said Wednesday that he spent two days last week testifying in Washington, D.C., and meeting with federal legislators about the Keystone XL Pipeline and other issues.

Although the Keystone XL Pipeline would not go through North Dakota, it would transport 60,000 barrels per day of North Dakota Bakken crude with space for up to 100,000 barrels per day, Helms said.

If the pipeline from Canada to Oklahoma existed today, North Dakota would have 300 to 500 fewer semi trips every day because oil would be transported by pipeline instead of by truck, Helms said.

The Department of Transportation estimates that three to six traffic fatalities each year are associated with that amount of trucking, as well as 80 to 150 traffic injuries, he said.

The Obama administration has twice blocked the Keystone XL, which needs federal approval because it crosses the Canadian border. Supporters urge Obama to approve the 1,700-mile pipeline, but opponents raise environmental concerns.

Helms testified about the Keystone XL Pipeline’s impacts to North Dakota last week to the U.S. House of Representatives Committee on Science, Space and Technology.

“There are some real hard numbers that we were able to provide on Keystone XL to show the impacts to North Dakota,” Helms said.

Helms’ comments came during his monthly update with reporters on oil production.

North Dakota oil production rose 0.5 percent in March to 782,812 barrels per day despite winter storms that at times shut down roads in the Oil Patch, according to preliminary figures the Department of Mineral Resources released Wednesday.

“Considering what the weather was like in March, I’m actually really pleased that oil production rose instead of declining,” Helms said.

The March production figure marks another all-time high for North Dakota oil production, which was 779,050 barrels per day in February.

More than 70 percent of the oil is transported out of the Bakken by rail, said Justin Kringstad, director of the North Dakota Pipeline Authority.

Helms also testified in Washington about the impact of the Bureau of Land Management’s proposed rule on hydraulic fracturing.

The Fort Berthold Reservation would feel the most impact from additional requirements on hydraulic fracturing, Helms said. Currently it takes about 180 to 290 days to get a drilling permit on the reservation, compared to 20 to 30 days for state and private lands in North Dakota, Helms said. With the new rule, Helms estimates the time to get a drilling permit on federal lands could double.

Oil and gas operators are picking up the pace in North Dakota, with the rig count reaching 193 in the state Wednesday morning.

Helms said he expects that number to continue climbing, but not to exceed 200 this summer. The all-time high was 218 rigs in May 2012, but operators are switching to higher efficiency rigs capable of drilling wells in an average of 22 days.

Spring road restrictions continue to slow oil activity in some areas, particularly Williams and Divide counties, Helms said. Those are the areas that will likely see additional rigs as restrictions are lifted, he said.

The percent of natural gas that is flared was 29 percent in March, down slightly from 30.4 percent in February. Helms said he expects to see significant progress to reduce flaring in the next few months.

Demand for library services increases as Oil Patch population grows

Posted on May 14, 2013 by Amy Dalrymple

Patrons use the Williston Community Library on Saturday, April 13, 2013. Amy Dalrymple/Forum News Service

WILLISTON, N.D. – The oil boom has prompted demand for library services here to quadruple, and the Williston Community Library is changing to meet the needs of its new population.

Job-seekers and oil boom workers often stand outside waiting for the Williston Community Library to open.

They come to use the computers or free wireless Internet to apply for jobs online, update resumes or email loved ones back home. At peak times, the patrons – primarily men – fill nearly every seat in the library.

Library Director Debbie Slais said the spike in demand for services has been stressful on staff, but they’ve made some changes to better keep up.

“It’s been quite a wild ride,” Slais said.

Some employees live in city-subsidized apartments, which has helped the library retain staff, Slais said.

The library added more computers and put strict time limits on computer usage to allow everyone an opportunity. Slais has noticed that many workers save up their money and the first thing they buy is a laptop to access the Internet.

The Dickinson Area Public Library has seen a similar increase in demand, with oilfield workers using the library’s Internet for everything from job searches to taking online safety courses, said Assistant Director Tina Kuntz.

The library has added some part-time staff to help keep up with the demand, Kuntz said.

At the McKenzie County Public Library in Watford city, it’s not uncommon for every table to be full.

Earlier this year, Nate Jeffries, a public works employee for Watford City, had to sit at the kids’ table because no other chairs were available. Jeffries, who moved to North Dakota from Colorado, uses the library for its free wireless Internet in his free time.

Brent Siu, who moved from Tennessee to Williston earlier this month, is one of the library’s frequent Internet users.

Siu, a truck driver, lives in a camper about 30 miles outside of town with limited cellphone reception and no running water. He spent one Saturday at the library video chatting with a friend.

“There’s nothing else to do in town,” Siu said.

Workers also frequently use the libraries to send faxes, make copies or scan documents.

“Our front service counter is just busy all the time,” Slais said.

In March, 1,600 people used the Williston library’s computers and 3,100 people accessed the library’s wireless Internet. The same individual could be counted more than once.

In both Williston and Dickinson, new families who have moved to the communities are getting library cards and using the services.

The Williston library now offers six story hours each week, up from one each week before the oil boom. The story hours are especially important for families that can’t find day care in Williston, Slais said.

“It’s a really good place for these new mothers and new kids to come and meet people,” Slais said.

The Williston library also is seeing a need for materials in Spanish and is ordering bilingual books and a bilingual learning station for elementary students. Circulation for the bookmobile is up throughout Williams County, with some rural schools depending on the bookmobile to help serve their growing enrollments, Slais said.

But one aspect of the library hasn’t increased much – its budget. The library’s revenue is based on property taxes, but so far the new housing being built hasn’t had much of an effect on the library’s budget, which is about $500,000 for this year, Slais said.

“Our income doesn’t rise in proportion to what our expenses are,” Slais said.

The library is usually open seven day a week but will be closed on Saturdays starting Memorial Day weekend and through the summer. Slais said she often gets asked why.

“I don’t have the money to do that,” she said.

The library in Dickinson also gets requests to stay open longer, Kuntz said. But the facility is already open 68 hours per week.

“We’re trying to accommodate everyone, but we can’t be open 24/7,” Kuntz said.

Faces of the Boom: Chiropractor follows patients to the Oil Patch

Posted on May 13, 2013 by Amy Dalrymple

TIOGA, N.D. – After Las Vegas chiropractor Stephen Alexander had 65 patients relocate to North Dakota, it wasn’t long before his phone started ringing.

The men who moved to northwest North Dakota to work in the Oil Patch struggled to find chiropractors available and called “Dr. Steve” for help.

“The area’s been so overrun with so many men, there’s not enough practitioners up here to serve those needs,” Alexander said.

Alexander, 43, who practiced for 12 years as a chiropractic physician in Las Vegas, decided to develop a chiropractic rehab clinic on wheels. He invested $200,000 in a 57-foot RV that is customized with a digital X-ray machine, examination room and other technology.

Alexander has been working in North Dakota full time since last October, primarily serving residents of the Target Logistics crew camps in Tioga, Williston, Watford City and Dickinson.

He parks his MaxHealth Mobile unit in the camp parking lots and takes appointments as early as 6:30 a.m. and as late as 11:30 p.m. to accommodate the workers’ long hours and different work shifts.

Alexander also provides on-site care for employees of energy service companies. He estimates he’s seen more than 2,000 patients from more than 40 states since October.

Many men have told Alexander that they would postpone seeking treatment because it was too difficult for them to take time off from work to drive to the closest town for an appointment.

“I’ve come across quite a few men living off a bottle of aspirin a week. That’s just not a lifestyle,” he said. “That’s a chronic, chemical Band-Aid, and I’m here to help.”

Alexander said he’s seen a significant number of men who have had surgeries before or who have herniated discs or other complex conditions.

“There’s a lot of men with bolts and rods and they’re out here working 13 hours a day,” Alexander said. “Some of these men, I’m in awe of because I can’t believe they get up every morning.”

In addition to chiropractic evaluation and treatment, Alexander performs drug testing, offers massage rehab and provides health exams for truck drivers who need to renew their commercial driver’s licenses.

Alexander plans to bring additional doctors to North Dakota and eventually expects to have four or five mobile clinics to serve the workers.

“This is a very satisfying professional pursuit to be at the right place at the right time and be needed,” Alexander said.

Alexander doesn’t have a website up yet but can be reached at (702) 630-1055 or maxhealthmobile@gmail.com.

Tribe breaks ground on refinery

Posted on May 9, 2013 by Amy Dalrymple

Three Affiliated Tribes Chairman Tex Hall shakes the hand of Bernice Larson on Wednesday, May 8, 2013, near Makoti, N.D., during a groundbreaking ceremony for a refinery owned by the tribe. Larson sold the land to the tribe. Standing between them is Thunder Butte Petroleum Services CEO Rich Mayer. Amy Dalrymple/Forum News Service

MAKOTI, N.D. – As the Three Affiliated Tribes blessed the ground Wednesday where a refinery will be built, one tribal council member called it a new day for the Mandan, Hidatsa and Arikara.

“It’s really an important time for our people. It’s exciting,” said tribal representative Ken Hall. “But we have to be mindful going forward to not lose our culture.”

The tribes held a ceremonial groundbreaking for the Thunder Butte Petroleum Services Refinery, which will be constructed in four phases over two years. It will have the capacity to process up to 20,000 barrels per day of Bakken crude that is produced on the Fort Berthold Reservation.

Construction is expected to begin in August on the first phase, a truck-to-rail crude oil transloading facility that later ties into the refinery, said Rich Mayer, CEO of Thunder Butte Petroleum Services.

The transloading facility, which involves building storage tanks and a connection to a Canadian Pacific line near the property, would load and ship one 120-car train every four days, said Kurt Swenson, vice president of Corval Group, a consultant involved with engineering on the project.

The rail facility will be operational by early 2014 while the refinery is being constructed.

The tribe is finalizing a contract with a company called Chemex LLC, which will construct a modular refinery in Bakersfield, Calif., and ship it to North Dakota to be assembled.

Once the contract is finalized, construction is estimated to take 18 to 24 months, Mayer said.

Initially the refinery will produce diesel and sell the byproducts. After the final phase, the refinery will have the ability to refine more diesel and also some gasoline, Mayer said.

The refinery will provide 300 local construction jobs and 75 to 100 full-time jobs after it’s operational, officials said.

“I’m just amazed at how big the impact is going to be on these communities,” Mayer said.

Three Affiliated Tribes elder Tony Mandan, left, blesses the land where a refinery will be built during a ceremony Wednesday, May 8, 2013, near Makoti, N.D.

The refinery is off of Highway 23 on 469 acres northwest of Makoti the tribe bought from Bernice Nelson of Minot, who used to farm on the property with her husband. Makoti, which had a population of 154 in 2010, is about 35 miles east of New Town.

The tribe has contributed $40 million toward the transloading facility portion of the project.

The approximate $450 million total cost will be financed with bonds, said Daniel Eastman, managing director of private investment banking firm John W. Loofbourrow Associates Inc., who traveled from New York to attend the ceremony.

Tribal members and others at the event praised Tribal Chairman Tex “Red Tipped Arrow” Hall for having the vision to pursue a refinery, a plan that began 10 years ago before the Bakken oil boom. Initially the proposal called for refining Canadian tar sands, but in 2008 the plans switched to refine the tribe’s own Bakken crude.

During the celebration, Hall reflected about his ancestors.

“We grew up poor. We were lucky if we had a pair of clean overalls,” Hall said. “But our parents made sure we went to school and got educated. They did the best they could for us. They didn’t know we’d have this oil and gas resource, but now we do. It’s our responsibility to manage it and we are.”

Three Affiliated Tribes officials are talking to other tribes about inter-tribe commerce agreements to distribute diesel from its refinery. Representatives from several tribes, including the Spokane Tribe of Indians, attended the event and are interested in distributing the diesel.

“They want to buy all of it,” Hall said. “I have to slow them down.”

Members of a group called Save Our Aboriginal Resources, who protested the tribe’s oil and gas expo this week and the groundbreaking, said the refinery should have been put to a vote of tribal members.

Marty Young Bear of New Town called the refinery “another money pit.”

Theodora Bird Bear of Mandaree said she worries about the effects on the reservation’s air and water.

“They can’t regulate it (oil development) now, so I can’t see how they can handle a refinery,” Bird Bear said.

The tribal project is one of three refineries being developed in North Dakota.

MDU Resources Group broke ground in March on a diesel refinery near Dickinson that is expected to be complete in late 2014. It will have the capacity to refine 20,000 barrels of Bakken Crude per day.

Dakota Oil Processing proposes a diesel refinery near Trenton. CEO Chester Trabucco said Wednesday the project is in final stages of financing and officials plan to make an announcement soon.

The Tesoro refinery in Mandan recently expanded to refine 68,000 barrels per day.

North Dakota produces nearly 800,000 barrels of oil per day.

Tribe says oil tax changes don’t go far enough

Posted on May 8, 2013 by Amy Dalrymple

Three Affiliated Tribes Chairman Tex Hall speaks Tuesday, May 7, 2013, at the Oil and Gas Expo in New Town, N.D. Amy Dalrymple/Forum News Service

NEW TOWN, N.D. – A new tribal oil tax agreement is a “huge improvement” but still contains bad language that doesn’t recognize tribal sovereignty, Three Affiliated Tribes Chairman Tex Hall said Tuesday.

“I do not believe the state of North Dakota has regulatory jurisdiction over the tribe,” Hall said during the first day of the Mandan, Hidatsa and Arikara Nation Oil and Gas Expo, prompting applause from the crowd.

North Dakota lawmakers approved House Bill 1198 on Friday that establishes guidelines for the governor to renegotiate an agreement with the tribes that would split oil tax revenues equally, sending more money to the Fort Berthold Reservation.

Currently, the state collects 80 percent of some of the oil tax revenue and the reservation receives 20 percent.

Gov. Jack Dalrymple signed the bill Monday, but he still needs to meet with tribal leadership to renegotiate the 2008 agreement.

Hall said in an interview Tuesday he’s not sure if he will sign the agreement if some of the language he objects to can’t be renegotiated.

“There are some serious misunderstandings by state legislators who think this is their tax money,” Hall said. “It’s our oil that you’re taxing and then nothing’s coming back.”

During the expo, Tribal Vice Chairman Fred Fox said the new agreement is progress, but he still thinks the tribe should get more tax revenue.

“It’s something that we’ll take inch by inch, but we’re not satisfied,” Fox said. “I think we should be getting 100 percent of that tax, not 50 percent.”

The expo, with the theme, “Sovereignty by the Barrel,” continues today and will conclude with a groundbreaking ceremony for the tribal-owned Thunder Butte Refinery near Makoti.

Protesters gather Tuesday, May 7, 2013, in New Town, N.D., to show their opposition for the Mandan Hidatsa and Arikara National Oil and Gas Expo. Amy Dalrymple/Forum News Service

About 20 people protested the expo, with neon signs such as “Get the frack out of here,” “Tribal members need homes” and “Opposed to refinery.”

Juliane Gillette of New Town, a member of a group called Save Our Aboriginal Resources, said she and others worry about effects on the environment and object to how tribal leadership is managing the oil development.

“They’re representing the oil companies right now and they’re not representing the people,” Gillette said.

Faces of the Boom: N.D. sees more out-of-state road crews

Posted on May 6, 2013 by Amy Dalrymple

Miguel Rodriguez waits for traffic to pass on Thursday, May 2, 2013, in Ray, N.D., while filling potholes on U.S. Highway 2. Amy Dalrymple/Forum News Service

RAY, N.D. – Some say roads in the Oil Patch have potholes so big they could swallow your car.

This could be true on U.S. Highway 2 in Ray, but a crew working to replace underground utilities fills the same potholes practically every day.

At Ray, consolidating the heavy truck traffic on U.S. Highway 2 from four lanes to two creates craters as big as 5 feet in diameter, sometimes forcing drivers to swerve into the oncoming lane of traffic to avoid them.

The speed is reduced to 15 mph, but most motorists exceed that, said Dan Rogers, superintendent for Lakeshore Toltest Corp. .

“Every time we fix them, they go faster,” Rogers said. “That makes it harder for us.”

Filling the potholes takes two to three hours each day and repairs on a bridge require them to block traffic. Rogers said crews initially filled potholes every day, but they’ve cut down to every few days to reduce traffic speeds.

The crew has been working since April on the first phase of the Highway 2 project in Ray. The full project, which includes concrete overlay, paving and replacement of gutter and sidewalks, is expected to take all summer.

The company is from Arizona, where work is slow, Rogers said. Crew members come from all over the country and go home to visit their families every few months.

“Everybody’s from somewhere else,” Rogers said.

Equipment operator Bill Schroeder of Spokane, Wash., has been working in North Dakota since October. Last year, he worked in Montana and was laid off early in the season.

Equipment operator Bill Schroeder of Spokane, Wash., works Thursday, May 2, 2013, on a road work project in Ray, N.D. Amy Dalrymple/Forum News Service

Miguel Rodriguez of Grand Island, Neb., came to North Dakota for work two years ago.

“North Dakota’s crazy,” Rodriguez said. “Yesterday it was cold. Today it’s hot.”

In recent years, North Dakota has seen more out-of-state contractors, both because of North Dakota’s increase in projects and also because companies in other states are looking for work, said Russ Hanson, executive vice president for the Associated General Contractors of North Dakota.

“Most of those other states are really struggling economically,” Hanson said.

One of the biggest challenges for the out-of-state contractors working in the Oil Patch is finding housing for their workers, Hanson said. Some rent apartments or long-term hotels for workers while others purchase housing units, he said.

For the men working in Ray, the company provides crew camp housing, Rogers said.

This construction season will bring a record number of contractors into North Dakota, though it’s tough to estimate how many workers that will be, Hanson said.

Western North Dakota will have an intense construction season this year with $695 million in North Dakota Department of Transportation projects. The entire state will have $878 million in NDDOT projects this year.

For the western part of the state, that’s more than double the $305 million in projects from last year.

Some have worried that as North Dakota has more construction projects, there won’t be enough bidders, Hanson said. But with the increased interest from out-of-state contractors, that hasn’t turned out to be the case.

“There are more bidders now than we’ve ever had,” Hanson said. “The competition is very good even with the increased amount of work.”

Oilmen have derby long-shot with Frac Daddy

Posted on May 3, 2013 by Amy Dalrymple

FRAC DADDY with Victor Lebron up on the track during Kentucky Derby preparation on April 30, 2013, in Louisville, Ky. Photo by Mark Cornelison, Lexington (Ky.) Herald-Leader

WILLISTON, N.D. — When it came time for two Montana oilmen to name their horse, Frac Daddy was a natural choice.

Petroleum geologist Carter Stewart, who does a lot of work in North Dakota, said the horse’s father is named Scat Daddy and naming the 3-year-old gray colt after hydraulic fracturing just popped out of his mouth.

Frac Daddy, owned by Stewart and partner Ken Schlenker, both of Billings, will be horse No. 18 on Saturday in the Kentucky Derby.

“We’ve got a huge fan base because we’ve made him a tribute to all the oilfield workers in America and especially the Williston Basin,” Stewart said.

Frac Daddy’s odds of winning have been set at 50-1, but Stewart is optimistic.

“Nobody’s really paying any attention to us, but our trainer says our horse is doing excellent,” he said.

Stewart, who spent the early part of his career as a well-site geologist in North Dakota, runs Stewart Geological Inc. and Cardinal Oil, an oil and gas operating company. Stewart also is the largest shareholder of Mountainview Energy, a publicly traded oil and gas company that operates in the Williston Basin.

Schlenker is an independent petroleum land man.

Bismarck attorney Lawrence Bender, who specializes in oil and gas law and is a longtime friend of Stewart, plans to travel to Churchill Downs in Louisville to cheer on Frac Daddy.

Bender said he and his wife follow the derby every year and are excited to attend for their first time from an owner’s suite with friends who have a horse competing for the $2 million first-place prize.

“I can’t think of anything that could top that,” Bender said.

Frac Daddy is prompting a lot of excitement about the derby from the oil and gas community, Stewart said.

“I think he’s got a shot,” Stewart said. “It’s a horse race. Everybody’s got a shot.”

N.D. House rejects oil tax reform bill

Posted on May 1, 2013 by Amy Dalrymple

BISMARCK — House legislators Wednesday rejected an oil tax reform bill that would have lowered the oil extraction tax, closed a tax loophole for low-producing wells and set up guidelines for a new tribal tax agreement.

Rep. David Drovdal, R-Arnegard, said the conference committee met 17 times to reach a compromise on House Bill 1234, which aimed to reform several oil tax provisions while staying close to revenue neutral for the state. The bill failed 71-21.

The bill would have increased taxes on the oil and gas industry by $65 million but would have resulted in a $9.9 million loss in revenue to the state of North Dakota because more tax dollars would go to the Three Affiliated Tribes, Drovdal said.

Rep. Scot Kelsh, D-Fargo, said the bill had some good provisions, but reducing the oil extraction tax from 6.5 percent to 6 percent was a deal-breaker.

Earlier Wednesday, Democrats called the proposal, which would have applied to new oil production, a “thoughtless, unnecessary shortchanging of North Dakota’s future” that would cost the state $280 million in the first four years.

“The industry is flourishing under that current tax rate,” Kelsh said. “As the industry grows, the need for infrastructure continues to grow.”

Other legislators who voted against the bill had concerns about the guidelines it established for a new agreement with the Three Affiliated Tribes that would equally divide oil taxes generated on the Fort Berthold Reservation between the tribes and the state.

No one spoke in opposition to dividing the tax revenues equally, but several said they wanted more assurance that the tribes would spend the new dollars on roads on infrastructure. The bill requires the Three Affiliated Tribes to report how the money is spent, but does not have any other requirements.

Rep. Mark Dosch, R-Bismarck, called it “a shame” that tribal leaders will not commit to spending the money on infrastructure and said he would oppose the bill.

“This should benefit all people of North Dakota and not just the tribal government,” Dosch said.

Others said it’s wrong for state legislators to tell a sovereign nation how to spend its money.

“You have to look at their wisdom and how they’re going to use their dollars and put a little bit of trust in them,” said Ken Onstad, D-Parshall.

Drovdal said he received a lot of emails from oil companies working on the reservation who support the bill.

The oil companies “absolutely need this bill to pass,” Drovdal said.

If a new agreement with the tribe is not reached, tribal leaders have indicated they could break the existing agreement and charge a tax on top of the state’s tax, making it too costly for companies to drill on the reservation.

Most legislators spoke in favor of the bill’s provision that would eliminate a tax loophole for low-producing well properties.

Low-producing wells, known as stripper wells, can receive tax exemptions if they fall below a designated production value. A tax loophole, however, exists for wells that are high-producing wells that are located near the weaker wells.

Eliminating that loophole would increase tax revenue by about $105 million for the 2013-15 biennium.

Republican legislators said during their caucus meeting before the vote that closing that loophole could be addressed in the budget bill for the Office of Management and Budget.

Rep. Vicky Steiner, R-Dickinson, said she supported the bill because while it wasn’t perfect, it cleaned up some old tax provisions that aren’t relevant with today’s technology.

“There were some things that we needed to update and match our tax policy to the Bakken and not what we did in the ’80s,” Steiner said.