Deductions to royalties for post production costs are not consistent even when the barrels are headed to the same plant, according to research done by Bob Skarphol, a former legislator who has been raising questions about post-production royalty deductions.
Skarphol plans to present some of the information he has been compiling on royalty deductions he said are unfair during two upcoming meetings, one in Tioga and another in Williston.
The first meeting is 7 p.m. Friday, Sept. 13 in the Tioga City Commission meeting room. The second is 7 p.m. Sept. 17 in the Williams County Commission meeting room in Williston.
Skarphol told the Williston Herald that he will have a Power Point presentation of data he has compiled about post-production costs that has resulted in garnishing royalties to cover costs of making natural gas marketable. The deductions are deemed inappropriate by many royalty owners.
“For me, this is to give people information that I have researched and am able to substantiate,” Skarphol said.
The data shows post production deductions for Beaver Lodge royalty owners of 41 percent on their checks, while royalty owners in White Earth are losing 31 percent.
Yet the production from the two locations is all going to the same plant, Skarphol said, and the White Earth production is the nearer location.
“The further away, the smaller the deduction is,” Skarphol said. “To my mind, that is totally illogical. So we need to have a conversation about the issues relative to this.”
Skarphol also believes there may be ongoing deductions that are less obvious, and that is something he is researching as well.
“As royalty owners, we’re not given access to the information we should have to determine if these types of actions are ongoing,” he said. “What needs to happen is the legislature needs to get involved and play a much more active role in what is and is not appropriate.”
Convincing the legislature to get involved, however, will require a large contingent of people who are interested in the matter, Skarphol said. That is one reason he has begun the Williston Basin Royalty Owners Association, to try and bring those who have questions and concerns about the issue together.
“If you are frustrated, come tell us why,” Skarphol said. “Maybe we can help you find a way to explain it better, and that is what we are all about. We are not giving legal advice, that is not our forte. We are about trying to get people educated. so we can educate the legislature.”