multiple issues of mineral ownership that were created when the Missouri River was flooded to form Lake Sakakawea. However, with the filing of the above lawsuit, the process to resolve those ownership issues will likely be
delayed. Due to these complexities, payment of royalties to the affected parties should be reviewed on a spacing unit by spacing unit basis.
Recent Rule Changes Approved by the North Dakota Industrial Commission
On December 4, 2017, the North Dakota Industrial Commission (NDIC) adopted new rules and amended various existing rules codified in North Dakota Administrative Code (NDAC) Chapter 43-02-03 (Oil & Gas); Chapter 43-02-05 (Underground Injection Control); Chapter 43-02-06 (Royalty Statements); Chapter 43-02-11 (Certification of Horizontal Shallow Gas Wells, Horizontal Reentry Wells, and Two-Year Inactive Wells); and Chapter 43-05-01 (Geologic Storage of Carbon Dioxide). These new and amended rules will become effective either April 1, 2018 or July 1, 2019, upon a determination of their legality by the Attorney General and approval by the legislative Administrative Rules Committee. There are numerous new rules and amendments to the above chapters. Of note are the amendments made to Chapter 43-02-06 regarding Royalty Statements, which become effective July 1, 2019. In addition to the existing requirements, the amendments to chapter 43-02-06 require that the Royalty Information Statement also include: a. The weighted average price for all oil, gas and natural gas liquids. The price must be the net price received by the producer after all deductions. b. The amount and purpose of any deduction made, identified as transportation, processing, compression, or administrative costs.
1, 2019 and requires that:
Within one hundred twenty days after the end of the month of the first sale of production from a well or change in the spacing unit of a well, the operator or payor shall provide the mineral owner with a statement identifying the spacing unit for the well (and the effective date of the spacing unit change if applicable), the net mineral acres owned by the mineral owner, the gross mineral acres in the spacing unit, and the mineral owner’s decimal interest that will be applied to the well. For a complete copy of all of the rule amendments, please See North Dakota Industrial Commission Order No. 28537, in Case No. 26062 at https://www.dmr.nd.gov/ oilgas/. Editor’s Note: These proposed rules are expected to be reviewed by the Administrative Rules Committee on March 14, 2018. Upon approval by legislators on the committee, the rules would go into effect on the dates noted above.
About the Author:
Kimberly A. Backman is a Partner with Crowley Fleck PLLP in Bismarck, North Dakota. She represents several large operators in the oil industry with her practice encompassing various areas of natural resource law with an emphasis on title examination. She is licensed in North Dakota and Montana and can be reached at kbackman@ crowleyfleck.com and 701-223-6585.
c. The amount and purpose of each adjustment or correction made.
Also added to Chapter 43-02-06, was Section 43-02- 06-01.1 regarding the Ownership Interest Information Statement. This new section also becomes effective July
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G r o w t h T h r o u g h E d u c a t i o n - J a n u a r y / F e b r u a r y / M a r c h
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