North Dakota Royalty Owners Seek Legislative Shield Against Industry Practices
BISMARCK, N.D. – A growing chorus of North Dakota lawmakers are signaling openness to reforms designed to safeguard oil and gas royalty owners from industry deductions that diminish their earnings, a ProPublica inquiry has revealed.The debate centers on whether current state regulations adequately protect landowners when calculating royalty payments from oil and gas production.
Unlike several other oil-producing states, North Dakota currently lacks specific limitations on the deductions oil companies can take from royalty checks-expenses that can significantly reduce the amount landowners receive. This has led to concerns that some companies are aggressively lowering payments, impacting thousands of North Dakota residents who own mineral rights. The issue is gaining traction as oil production continues to be a major economic driver for the state,and as landowners become increasingly aware of discrepancies in their royalty statements.
Senator kent Weston,a Republican from Sarles,recently discussed the issue with legislative colleagues and staff from the North Dakota Petroleum Council. While he believes the current system is “fair” and vital for continued investment in the state’s oil and gas sector, other legislators are questioning the status quo. Senator Armstrong expressed a desire to understand why existing mechanisms aren’t functioning effectively and explore potential adjustments.
The debate comes as North Dakota’s oil industry continues to boom. The state produced approximately 1.2 million barrels of oil per day in July 2024, according to the North Dakota Department of Natural Resources. Royalty payments represent a notable income stream for many landowners, particularly in the western part of the state where oil extraction is concentrated.
Currently, oil companies routinely deduct costs like transportation, processing, and taxes from gross revenue before calculating royalty payments. While these deductions are standard practice, landowners argue that some companies are including excessive or questionable expenses, effectively reducing their share of the profits.
Efforts to reach House Majority Leader mike Lefor and Representative todd Porter, chair of the House committee overseeing the energy industry, for comment were unsuccessful. The potential for legislative action remains uncertain, but the growing discussion signals a shift in the conversation surrounding oil and gas regulation in North Dakota. Any changes to the law could have substantial financial implications for both landowners and the oil industry.
