North Dakota tribes’ oil output rivals US states

Oil production on the Fort Berthold Indian Reservation in North Dakota has become so large that it would rank among the top 10 oil producing states in the nation, a tribal leader said Tuesday.

Tex Hall, chairman of the Three Affiliated Tribes — Mandan, Hidatsa and Arikara — said the more than 1,000 wells in the Fort Berthold Indian Reservation produce in excess of 180,000 barrels of oil a day. Compared directly with state production, that puts them among the top 10 oil producers in the nation.

“It’s a modern day gold rush. It’s a modern day Deadwood, South Dakota,” he said in a video statement that was broadcast at the tribe’s third annual oil and gas expo at the 4 Bears Casino in New Town, North Dakota.

The tribe’s production levels represent about one-fifth of the total oil output in North Dakota, which is ranked second in oil production, trailing only Texas. North Dakota is poised to hit production levels of one million barrels of oil per day by June.

In January, wells on the Fort Berthold Indian Reservation produced more than 162,000 barrels of oil per day, according to the latest production figures available on the tribes’ website. That figure was higher than production in Kansas, which is the 10th biggest oil-producing state.

Hall did not say how much money the tribes have made from the oil production, but North Dakota state Tax Department records show that the tribe received $131.8 million in fiscal 2013 as its share of revenue under an agreement with the state.

From post #9
http://www.freerepublic.com/focus/news/3147639/posts?page=9#9

If you drive from reservation to reservation in ND (they are not that far apart) the difference is stunning.

The Sioux reservations look like well, reservations, with broken down housing and trash strewed everywhere. Fort Berthold mostly looks like any booming small town.

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And it sounds like with the building of a small refinery and gas processing plant, they are building for the future as well.

It will be interesting to see whether the tribe allows that to be lockboxed. In absence of their agreement with the state, this wouldn’t be a strong enough source of collateral, if the court deciding the disposition of disputes were Tribal.

Their agreement with the state, and their potential to become a party to that agreement, potentially, means whatever dispute resolution clause they’ve agreed to with the state would go for the banks. Doubt seriously that the state agreed to resolve their dispute in Tribal court. Venue is probably federal.

In absence of that agreement, lockboxing the revenue still means that the tribe could just stop sending checks for whatever compelling reason the Tribe could come up with. If your venue is Tribal court, there isn’t much you as a bank could do about that. Whether the revenue in collateral here comes from an existing plant or from a casino, or a lemonade stand for that matter, is immaterial. Dispute resolution has to be such that the banks could actually expect not just a resolution of the dispute, but also enforcement.

That’s the other thing. Getting your judgment in Tribal court is hard enough. Getting it enforced is quite another.

They may be able to finance this on their own. I’ve provided a link to the largest tribally owned bank in the US. To me, you’d think the Tribes would have considered, “Hey, we should be financing our own projects and carrying our own paper. We’d then have more money to stake bigger projects.”

Here’s the link:

http://www.potawatomi.org/enterprises/banking

At this late date, you should be reading about the Tribes just putting up the refinery, telling the EPA that their Air Permits are for the pale face, and just start cranking out Ethanol-free gasoline at a cut rate to compete with US-based producers.

I haven’t seen any of those articles. I should be reading them, but they can’t get out of their own way. Tribes are best thought of like Saudi Arabia - a few families who own everything in that country. However, eventually the Saudi’s figured out how to be at least a global member of the free enterprise system and a reliable supplier of oil to the world. They screwed up early on with their embargo, but proved they could learn from that.

It will be interesting to see if the Nations learn how to do it the ‘Saudi’ way - retain your autocracy but become reliable. They could do as much as anyone to spur economic development in the US, ESPECIALLY for their own selfish reasons.

They need their own banking system, and their own capital facilities - ones that would be able to write performance bonds that would not require land as collateral. They could do it. We’ll see if they do.

In absence of that agreement, lockboxing the revenue still means that the tribe could just stop sending checks for whatever compelling reason the Tribe could come up with.

I understood that revenue stream was coming from the state. I was guessing (and only guessing) that it could be attached prior to the tribe receiving it. I agree depending upon a Tribal court is the same as losing.

Also this is a "small" and simple type of refinery. The type mostly built on skidded equipment. Much of the dollar value could be disconnected and removed. It would not be worth the total installed cost of the refinery, but it could reasonably be collateral for half.

I actually believe that the Tribes want their courts to be considered legitimate. There are folks in leadership that understand that if you can’t expect your contract to be enforced fairly, then when the gambling thing goes away, it will be over.

Again, an incredibly tough sell for the Tribes. For those that understand how Tribes work, the thumbnail on doing business in a rez is ‘Why?’

The tax benefits are so narrowly defined down to Tribal members and entities, however, feed stocks can be bought without local, state, or federal taxes.

It doesn’t help that Tribes in WA can sell gasoline without paying any taxes at all, but the price difference between rez and non-rez gas is only a nickel.

The lessons come slow for them. It’s only recently that they’ve stopped running to Federal court for everything. They’re still going there, but less.

Politically, they are big D’s. Ideologically, you’d be surprised. In the pecking order on the progressive side, they are the top of the heap - ranking even above blacks and environmentalists as protected classes. They are pro-revenue, and anti-capitalist. They are deeply scarred by the lying done to them in their recent history.

They can’t get out of their own way, and change is glacial.

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