A North Dakota agency is attempting to collect millions in oil and gas royalty payments it says are owed to the state.
But the exact amounts owed to the Department of Trust Lands is unknown as companies have resisted providing information to the state, the state Land Commissioner said Thursday.
The Board of University and School Lands met in a closed-door executive session for more than 30 minutes Thursday to discuss with attorneys an ongoing dispute with the oil industry. The disagreement began after the department discovered during a recent audit that some companies took improper deductions for transportation, processing and other costs on royalties owed to the state.
The North Dakota Petroleum Council disagrees with the department’s interpretation of the leases, which date back to 1979, arguing the department is drastically changing its policy.
“This is going to be in litigation,” Ron Ness, president of the industry group, said Thursday. “It’s obviously a huge issue.”
Of the 19 operators the department has audited for the years 2012 through 2014, 10 companies incorrectly paid the state royalties on oil production and 15 companies incorrectly paid royalties on natural gas production, said Taylor Lee, director of revenue compliance for the Department of Trust Lands.
The amount of money owed to the state, which benefits trusts such as the Common Schools Trust Fund, is still being determined, but Land Commissioner Lance Gaebe said it’s in the millions