American Indian mineral owners digest new pricing system
NEW TOWN — Fort Berthold American Indian mineral owners gave input Tuesday to federal government officials on a new proposal for how their oil royalties are calculated.
Much of the meeting, at New Town Civic Center, was spent explaining the pricing system, while mineral owners also steered the discussion toward other issues they have with their leases.
When prices per barrel for a given area’s leases are put in a descending order, the price, starting from the top, at which the volume of oil reaches 25 percent of the total, would be the standard price for American Indian mineral owners.
Oil companies pay owners the higher of the market index price (minus the difference between that and the above formula index price) and the gross proceeds they receive on the sale of the oil, Office of Natural Resources Revenue Director Gregory Gould said.
For oil sold for more than the index price, lessors get the full amount. If the oil in that designated area is sold for less than that amount — the case for three-quarters of the oil — the lessor still gets the higher amount.
Thus, ONRR representatives said, it’s a win for American Indian mineral owners.
“It’s a much bigger benefit” for Indian mineral owners, said Paul Tyler, program manager for State and Indian Coordination at ONRR.
The industry is willing to pay the higher price because of the certainty and streamlining of the system this way, ONRR Deputy Director Deborah Gibbs Tschudy said.
Still, Tyler said, “we were really surprised the industry agreed” to this new pricing system.
The question of which market index — like the New York Mercantile Exchange or Brent Crude — would be used was a concern at the meeting.
Tyler said that was the biggest concern he heard Tuesday. He said ONRR would pick the market that properly represents the oil sold off reservation lands and that would bring American Indian royalty owners the most benefit.
Community member Theodora Bird Bear said it is important that ONRR chooses the market index that brings in the most royalties.
ONRR’s goal is to publish the proposed rule on the Federal Register in March, after which there will be a public comment period, Tyler said.
Need for local office brought up Questions often veered off the topic of the new pricing rule, as the meeting became a forum for concerns about all aspects of American Indian mineral ownership.
Community members repeatedly brought up the need for a Bureau of Land Management and ONRR office within reservation boundaries — there’s not enough help now, they said.
In response to complaints, Tschudy apologized on behalf of the Department of the Interior.
Currently, two outreach specialists come to New Town monthly for questions or clarifications about mineral leases, Gould said.
But that didn’t seem to be enough, according to the audience Tuesday, who said ONRR needs to do a better job of watching out for Indian lessors that may not be experts in oil.
Bird Bear said she has heard of royalty owners receiving pages upon pages of complex paperwork regarding their leases to oil companies.
“An average person — who’s gonna know what that means?” she said.
Community member Mike Cross said the mineral owners need help understanding the leases.
“We will never learn to manage our resources because it’s too complex,” he said.
An idea for a “virtual office” for the reservation was floated a couple years ago but never took off, Gould said.
Gould said the group would discuss the staffing issues and the idea of a reservation office with Bureau of Indian Affairs Director Michael Black.
But Gould said in an interview after the meeting that money could be an issue — tough Department of the Interior budget talks are putting any talks of new offices on hold.