North Dakota Native American tribe takes an active role in oil and gas production.
One Native American tribe is taking advantage of its location by drilling the first tribal-owned oil wells in the Bakken Shale play.
The wells are located near the small reservation town of Mandaree, N.D., and owned by the Mandan, Hidatsa and Arikara Nation – commonly called the Three Affiliated Tribes.
“It presents a huge opportunity for the tribe to get involved,” says Ken Hall, board chairman of the tribal energy company Missouri River Resources.
Currently there are 1,300-plus wells on the Fort Berthold Indian Reservation that produce a third of North Dakota’s daily output, but the tribe only receives a fraction of money generated through royalties and a tax-sharing agreement with the state.
The four tribal-owned wells are important because the tribe will take in 82 percent of the money generated. Missouri River Resources hopes to begin drilling on the 320 acres in February.
“That’s how you get the lion’s share of the pie, and that’s what we’re doing,” Hall says.
USING A NATIONAL MODEL
Missouri River Resources says money earned by the company currently goes back into developing the company, but officials will work with the tribe’s elected body to share earnings.
Growth opportunities for Missouri River Resources within the reservation are limited because the tribe leased out most of the oil rights to private companies when the tribe was struggling to get out of debt at the start of the oil boom.
“If everything’s leased out, I don’t know how I can find more land unless I go off the reservation,” says Dave Williams, CEO of Missouri River Resources.
A tribe in Colorado was forced to go off reservation for drilling opportunities two decades ago and now the Southern Ute Tribe’s energy company, Red Willow Production Company, is considered the national model for tribal resource development.
In 1992, the Southern Ute Tribe, located in Ignacio, Colo., founded Red Willow to control and operate the tribe’s energy resources. Red Willow went from operating a few wells on tribal lands to having an interest in over 1,800 wells in major basins across the U.S. and the Gulf of Mexico.
Red Willow has net production in excess of 70 billion cubic feet of gas equivalent per year.
“I started looking for experts and I actually went down to Colorado to visit the Red Willow Production Company and asked for their business plan of how they created their company and they gave me it,” Williams says.
FINDING THE RIGHT PEOPLE
Williams has 20 years of experience in the oil industry working for Gulf Oil and Chevron and knew the company needed good petroleum engineers and geologists.
“First you need resources, but you also need expertise,” Williams says. “That’s been my primary objective, to hire as many experts as I can find.”
Missouri River Resources was officially formed in 2011. The company now has four petroleum engineers — three in the midstream sector and one in the exploration and production sector.
“We’re spending $10 million a well, so we’re very frugal and want to make sure we do this right,” Williams says. “We want to be quick here, but we’re not going to hurry. We want to make sure we do this right so we have the ability to show the people, the industry, that the Three Affiliated Tribes can operate their own wells.”
Beyond the immediate drilling plans, Hall and Williams say they hope to start a workforce development program on the reservation to attract Native Americans from across the country who want to work in oil and gas.
“We just want people to have the ability or option to make a great living,” Williams says.