Interview: Rep. Onstad Says Surface Rights Owners In Oil Patch Should Be Compensated For Lost Production

Oil_Pu331

The oil boom in western North Dakota has led to what is at times a complicated relationship between mineral rights owners, surface rights owners and oil/gas developers. You see, the person who owns the rights to the minerals under the land may not be the same person who owns the surface rights to the land. While the person making money from the development under the land is sitting pretty, the person trying to farm or ranch the land above it can be left out in the cold.

State Rep. Kenton Onstad, a Democrat from the Parshall area, wants to strengthen protections for surface rights owners. He says that more notification should be given to surface rights owners when a well is up for permitting so that they have more time to engage in the process. He also wants land owners compensated not just for the value of the land, but for the value of whatever production (crops, ranching, etc.) that land might have produced.

He says the legislature has moved in the right direction on this issue in the past, more can be done. “Legislators are more educated” about what’s going on in the oil patch he told me during our interview, noting that more eastern legislators have seen the oil boom first hand now. “This isn’t for the next five years. This is for the next 30 years” of development, he said.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • WOOF

    Imagine law that says your neighbor can take your property
    if he digs a hole under your fence.
    Property has no meaning.

    • kevindf

      Don’t buy any property that doesn’t include all rights.

      • WOOF

        Even if you have mineral rights it’s legal to drill horizontally from your neighbors “property”.

        • http://sayanythingblog.com Rob

          You obviously have no idea what you’re talking about.

          • WOOF

            Typo “it’s legal to drill horizontally under your neighbors “property”.”

          • Clarence A. Herz

            You still have no idea.

          • WOOF

            Fill me in on the rule of capture ,

      • http://www.facebook.com/profile.php?id=74603543 Jordan W Green

        Do you own the mineral rights under the lot your house sits on? I doubt it… Also, a lot of these mineral rights are under sections 16 and 36 of townships where the state by law was required to keep the mineral rights when selling the land. Does that change your perspective?

  • awfulorv

    Ah yes! a like thing happened to poor folks who, aimlessly, strolled into a bank during the housing run up. Many of them were forced to sign mortgage documents, under the threat of arm breakage, by the, thuggish, bank officers, and tellers. Looks like much the same has happened here. Ole and Lena were, apparently, not told that the documents they were signing, and the monies they could receive from the transaction, might not be as great as Joe Jones, down the road, has received. The same Joe who is now boasting of his coup through hill, and dale, and making the meager payments Ole has received, pitiable, by comparison. Of course old Joe spent good money for a lawyer, before he signed, whereas Ole and Lena thought they’d save those dollars for some higher grade snuff and a new waxed tablecloth. Don’t feel like the Lone Ranger though, Ole, even those huge NFL footballers were not told, before they signed their multi-million dollar contracts with the greedy owners, that headaches might develop from high speed collisions on the playing field. Of course these poor, obtuse, folks have the ultimate, sympatico, excuse Ole, unless your ancestors were brought to these shores, long ago, in the dank hold of a Lutefisk boat , that is.

  • ShortSighted

    The value of land is based on what is and will be produced. Land is not inherently valuable. Its value is based on the cash (or in some cases recreation) it will produce.

    No one would value a business asset without factoring the profits it will produce. The correlation between land and farm profits is a prime example of this analysis.

    The representative is good-natured in his intentions but fails to recognize this payment has already been made.

  • Mike

    Right idea. Wrong arena. It’s not the government’s job to enter in to the private matters of exchanging goods and services for money. That’s between the landowner and the oil company, et al.

    • Roy_Bean

      This is another reason that the legislature shouldn’t meet every year.

  • Andrea Toman

    Trying to undo a contract using legislation. Messy. I have some suggestions, but most involve retaining all mineral rights rather than selling them. Rent out mineral rights with a portion of the surface needed. Also, don’t sign stuff unless you know what you are signing! I’m starting to think everyone should have a lawyer.

    • http://sayanythingblog.com Rob

      I don’t know that he’s talking about undoing past deals with surface rights owners, but rather providing a new model going forward.

      I’m not sure I agree with the methods, but I don’t think we should dismiss the need to protect the property rights of surface owners either.

  • cylde

    The land owner was compensated when he sold the mineral rights. Most thought that the buyer was a fool because the oil was not recoverable at that time. Some bought the property after the mineral rights were sold but they knew what they were doing and did so willingly.

  • Clarence A. Herz

    The surface owners ARE compensated every step of the way whether they own the minerals or not. They are paid for the well, for the pipeline, for damages and for the ROW. Block valves pay 1,000 per year and some pipelines now have 30 year terms. Most wells will only produce for 20 to 30 years and then they will be plugged and the surface reclaimed. Why does everyone have there hand out in Western North Dakota?

  • jimmypop

    “the person trying to farm or ranch the land above it can be left out in the cold.”

    nothing more than tears from people that are seeing everyone around them get rich. they should not have sold the mineral rights or bought the land without owning them. as stated before, everyone that sold the rights was laughing at the local cafe at the idiots that bought them. oops.

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