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Counties say they are penalized for hosting oil development

BISMARCK -- North Dakota's oil producing counties shouldn't be penalized for helping plump up the state treasury, county officials and a few lawmakers said Wednesday in appealing to the Legislature for assistance.

With at least one county in the state on track to eventually host one oil well every square mile, county officials are dreading the ever-increasing cost of maintaining roads, bridges, sheriff patrols and other county services with what they say is too little money from the oil taxes pouring into the state.

The counties met with the Legislature's interim Taxation Committee Wednesday.

Two legislators, Rep. Shirley Meyer, D-Dickinson, and Sen. Connie Triplett, D-Grand Forks said they will have bills in the 2009 session to raise the caps that limit how much assistance the oil counties get.

Lawmakers heard the counties' pleas as well as an update from state's chief oil and gas development regulator, who explained the ever-escalating oil development in North Dakota and the 20 or more years the state can expect to host the boom.

Under current law, the 16 counties in North Dakota that produce oil and gas share $6 million in oil impact grants every two years to help them maintain roads, bridges and other infrastructure pummeled by oil field traffic. The fund is capped at $6 million. Meyer said her bill will raise it to $40 million.

Counties also get a minority share of oil taxes in addition to the impact grants, but that money is capped, too, and when a single road to a single oil well is beaten up by 700 to 1,000 semi-tractor trailer loads weighing 30 to 40 tons each, it's not enough to keep rural roads and bridges from falling apart, Terrald Bang of Killdeer and several others said.

Bang said he and his neighbors in Dunn County welcome oil development and know that the nation needs the oil, but feel their county is not getting the help it should to support the development.

"This is a major, major problem," said Sen. Bill Bowman, R-Bowman, who sought in the last legislative session to raise the cap. "This (development) is all very beneficial as far as our state general fund," he said. "But it's important to take care of the infrastructure first."

When the counties run out of funds to fix roads, it falls to the property owners, who see their taxes raised, he said.

"Why would you want to penalize the property tax payers? He asked. "I just have never figured this out, why there's a cap in the first place."

Vicky Steiner, executive director of the Association of Oil and Gas Producing Counties, said the bottom line is that the counties need help if they are going to host another two decades of development of the lucrative Bakken Formation.

Lynn Helms, director of the state Department of Mineral Resources, said, "Virtually every square mile of northern Dunn County and Mountrail County are going to have a well on it."

Oil companies have cut in half the amount of time it takes them to drill and develop each well. So when the number of drilling rigs in the state nearly doubled since last year, from 40 to the current 76, "We've doubled our double," Helms said.

The state is currently issuing a permit for the first-ever oil well in Mercer County, he said.

Janell Cole works for Forum Communications Co., which owns The Dickinson Press.