A new royalty owners association has set up a website to take on what its founder, former legislator and current mineral rights owner Bob Skarphol, believes are unfair deductions from the royalties of mineral owners.
Skarphol began raising questions last year about the oil and gas industry deducting post-production costs for making natural gas marketable from royalties.
Seeing no progress in the last legislative session, he is taking the next step by setting up an easy way to collect memberships statewide for a new organization that will focus on the issue.
Membership costs will be graduated according to the size of mineral acres owned. The membership fee is $45 for those owning 100 acres, $75 for those with 100 to 500 acres, and $105 for those above 500 acres.
Skarphol said the different levels of membership are intended to encourage participation by small mineral owners. As membership grows, a board will be selected to oversee the association and provide guidance moving forward.
Skarphol was active last legislative session in pushing for attention to the issue, but said there was really no progress made.
The post-production royalty deductions were among legislative studies proposed for the intersession, but Legislative Management chose other studies, deferring instead to changes in royalty statements that were supposed to make deductions clearer. Those went into effect July 1.
“Those new rules were simply designed to try to provide a better description of what is transpiring,” Skarphol said. “But it is what is transpiring that is the issue, not how well we can understand it.”
Most states don’t allow post production deductions like the ones North Dakota is allowing, Skarphol said.
In the case of his wife’s royalty statement, as an example, the post-production charges to make natural gas sellable were $13.60 — greater than the royalty of $2.25. The difference came from the royalties his wife should have been paid for crude oil. That amounted to 37 percent of his wife’s oil royalty disappearing.
Many retirees depend on royalty incomes, Skarphol said. To suddenly start deducting a bunch of post-production expenses from these checks is simply unfair.
“The lease that they have that they are operating under was signed in 1949,” Skarphol added. “They did not charge post production costs until April of 2007. For 58 years they didn’t charge those costs.”
But a decision from the North Dakota Supreme Court “opened the floodgates,” Skarphol said, to not just post-production costs that make natural gas marketable, but to other new post-production costs that were never historically charged, such as depreciation.
“Ultimately, we need to find out the legality of that issue,” Skarphol said. “And we need to find out whether we will tolerate it as a state.”
As a former legislator himself, Skarphol believes royalty owners have a tough challenge ahead of them to educate members of the legislature to understand the issues at hand, and why they are so unfair to mineral owners.
“It’s a very, very complicated issue,” Skarphol said. “And unless you have a reason to understand, it takes a lot of work to gain an understanding of it. If you are not getting the monthly royalty statements, your eyes glaze over because you are so unfamiliar with it. The process is going to be difficult to educate them on the frustrations of royalty owners.”
While there is a lot of frustration out there, Skarphol said, action will be key to changing things. It will take a large membership class to build momentum and push for change.
“The idea (of the website) is to see if there’s adequate interest in moving forward,” he said. “Two or three people cannot do this.”
Inspired by the desire to give back to their community, Chaliise and Erick Nelson are working with New Hope Church to bring some life back into McVay Elementary’s lawn, even if that means starting from scratch.
“What are we doing this for again?” asked nine-year-old Wyatt Nelson, perched upon a cinder-block planter in front of McVay as Kurtis Silva and Jared Stahura made repairs to the planter, cementing blocks back into place one by one.
“Because we’re helping out and giving back, isn’t that cool?” replied Silva.
Working with New Hope Church as part of their Love Does program, the Nelsons, along with the help of Silva, Stahura and other volunteers, worked in the hot sun on Saturday, July 6, tearing apart the existing worn-out planters and repairing them to make them last longer.
“They call, and we provide.” Chaliise told the Williston Herald.
As part of a beautification project at the school, the Nelsons are giving McVay’s lawn a face-lift, which requires that they kill off the existing lawn, which Nelson says is mainly crabgrass and clover, tilling up the entire area, and starting from square one.
“The best way to attack this is from the ground up,” Chaliise explained. “So we just want to clear this out, kill it and start over.”
With the help of ProSafe Services in Williston, the Nelson’s are doing just that. ProSafe will kill the existing lawn, and the Nelsons will dig it up and re-seed it, giving the school a fresh new lawn in just a matter of weeks. While they wait for the lawn to die off, the volunteers saw that repairs were needed for the schools planters, which the group will rebuild and repaint.
The Nelsons are one of many groups of volunteers that works through New Hope to assist in various projects around the community. Recently, another Love Does project was done at Wilkinson Elementary, where volunteers gave the school’s hallways a much need coat of fresh paint. Chaliise said she and Erick have been a part of New Hope for about eight years, and have participated in many Love Does projects during that time.
“Any time there’s a need within the community, we try to accommodate.” she said.
The projects are typically done as part of Love Does Week, which took place at the end of May. Julie Skurdal, Community Outreach Coordinator for New Hope, said the program has expanded from the week-long event to now include the first Saturday of each month. With so many needs in the community, Skurdal said, the church has always encouraged its members to give back to their neighbors.
“We just want to give irrationally to the community,” she explained. “Just give back to them and let them know that they can count on New Hope and that if there’s a need we’re going to do our best to take care of it. We want to be more than just the big church that’s on the corner; we want them to know our people and know that our people care. We just want to help wherever we can.”
The North Dakota Wheat Commission is sponsoring a Pre-harvest Marketing Seminar in conjunction with the North Central Research Extension Fields Days in Minot on Wednesday, July 17. The seminar will start at 1 p.m., and will be held in the meeting room at the NCREC. Mike Krueger of The Money Farm will open the seminar and discuss marketing strategies for harvest and beyond, as well as mega issues impacting markets. This presentation is designed to give producers some perspective on major factors influencing markets, and what strategies might offer the most potential to achieve the best price on their 2019 crops.
The second speaker on the program will be Oleksandr Bayuk, Senior Wheat Merchandiser, CHS, Inc. Mr. Bayuk will provide a more detailed discussion on the demand outlook for hard red spring and durum wheat. He is directly involved with the export merchandising of wheat for CHS, giving him some unique perspective on what the 2019 marketing year will provide, and which countries provide the best opportunities. Wrapping up the session will be a presentation by the North Dakota Wheat Commission, focusing on industry trends and issues impacting North Dakota wheat producers.
Both events that day are free, and no registration is required. The NDSU NCREC Field Day kicks off at 8:30 that morning and includes discussion and plot tours on a number of production related topics including hybrid wheat, managing acidic soils, weed control, and pulse crops and canola research. This will be followed by lunch at noon, and then the pre-harvest marketing seminar.
For additional information on both programs, please call the NDSU NCREC office at 701-857-7677, or the ND Wheat Commission at 701-328-5111.
The economy in Williston and Williams County continues to grow, with a recent report showing increased numbers in many economic sectors in the area.
In an Economy at a Glance report compiled on July 5, 2019 by Williston Economic Development, most areas showed favorable growth. The data includes numbers from May 2018 and 2019, as well as Year To Date for both years. The data comes from various sources, including the Convention and Visitors Bureau, the Office of the State Tax Commissioner and Job Service of North Dakota.
1.5 percent: The Williams County unemployment rate as of May 2019, down from 1.8 percent in 2018. The State’s unemployment rate dropped overall, showing 2.1% in May 2019 versus 2.3% in 2018.
Sales Tax Distributions
$9,626,274: The 2019 Year To Date distributions for Williston. This is $1,315,360 higher than this time in 2018. Sales tax distributions for May 2019 were $165,351 higher than May 2018.
$11,957,066: The 2019 Year To Date distributions for Williams County, showing an increase of $2,830,944 than 2018. May 2019 showed a $435,463 increase over May 2018.
Taxable Sales and Purchases
15.54 percent: The percentage change from fourth quarter taxable sales and purchases in Williston, which totaled $407,968,930 in 2018, up $54,859,651 from the fourth quarter of 2017.
15.68 percent: The percentage change from fourth quarter taxable sales and purchases in Williams County, which totaled $431,087,375 in 2018, an increase of $58,437,347 in the fourth quarter of 2017.
152: The Year To Date number of single family homes sold in Williston. The number is down from 2018, which showed 170 homes sold during the same period. May 2019 numbers were also lower, showing just 39 homes sold, as opposed to 51 in May 2018.
$274,725: The 2019 Year To Date average sale price of a single family home in Williston. The average is $32,311 higher than the same period in 2018. May 2019 numbers were also higher, showing the average price $55,132 higher than May 2018.
34,009: 2019 Year To Date enplanements at Sloulin Field International Airport. That is an increase of 5,269 from 2018. May 2019 showed 7,868 enplanements, up from 6,509 in May 2018.
130: The Year To Date number of building permits issued in Williston, up from 124 in 2018. This includes permits for 10 new residential, such as singly family homes, townhouses and condos; one new apartment complex or duplex, and five new commercial buildings.
$27,575,257: The total Year To Date value of the building permits issued. This is up $1,365,099 from 2018.
Joseph and Rachel Irvine, who are both lieutenants with the Salvation Army, like to joke that they’re about as close as it gets to a dynastic marriage in the church.
Both of their parents were also Salvation Army officers, and before Rachel Irvine’s parents became officers, they were part of the ministry Joseph’s parents oversaw.
Now the two have come to Williston, where they will oversee all of the church’s program’s in Williams County.
Despite the joke about a dynastic marriage, the two actually weren’t sure at first they wanted to become officers, the term the Salvation Army uses for its ordained ministers.
“We took a little time and prayed on it,” Joseph said.
For Salvationists, the officer position is an important one, because officers do more than just preach. Joseph said one of his friends said the position is more like a full-time director of an agency and a part-time pastor.
“Both of those are really huge responsibilities,” he said.
There’s also a thrift store to oversee, community functions to take part in and the entire local church organization to oversee.
“It’s a hard row to hoe sometimes,” Rachel said.
But the pair are excited to be in Williston and to see what the future has in store. They’ve heard stories about the need that exists here and the generosity, as well.
One thing Joseph thinks is key is serving as a place where connections can be made, so whatever needs the community might have can be met.
“I see that the Salvation Army can take a step forward to fashion these connections (in the community),” he said.
This is the second posting for the couple, who previously led the Salvation Army in Beatrice, Nebraska. They also had the experience of growing up as the children of officers, so moved around regularly.
“You get to see all kinds of different places,” Rachel said.
Although every community has different needs, the couple is looking forward to the challenge here.
“I, for one, am really excited about the possibilities,” Joseph said.