- Associated Press - Sunday, November 8, 2015

NEW TOWN, N.D. (AP) - The decline in oil prices in past months is having an impact on the Three Affiliated Tribes and their oil-rich Fort Berthold Reservation.

Mark Fox, who was elected tribal chairman nearly a year ago, said the downturn in oil prices and activity in the area is quite noticeable.

“Driving every day, you notice it’s a lot less than it was a year or two ago as far as traffic and fervor,” Fox told the Minot Daily News (https://bit.ly/1LQjheM ). “We have less revenue because the price of the barrel is cut in half and that hurts significantly.”

But on the other hand, he said the slowdown has provided some relief for the tribe in other ways.

“Traffic congestion, general activity and everything else have slowed down. It gives us a chance to take a breather and see where we’re at and what we need to do because at some point in time it will ramp back up. I look at that as a positive way,” he said. “If we take advantage of this now, we can get things into place and do what we need to do to be ready for the acceleration when it comes.”

When Fox was elected chairman of the Three Affiliated Tribes Nov. 4, 2014, the price of North Dakota sweet crude had already fallen to $60.15 a barrel. As of this past Oct. 12, the price of North Dakota light sweet crude was $34.25, according to Flint Hills Resources and the North Dakota Department of Mineral Resources

More than a year ago the Three Affiliated Tribes broke ground for a refinery, Thunder Butte Petroleum Services Inc., to be constructed on reservation land west of Makoti. Following Fox taking office in late 2014, he told the Minot Daily News the refinery plans were being revamped.

Fox said last month the refinery continues to develop but he would characterize it, in his own words, as “being slow, but it’s slow for a reason.”

“The primary reason is when we are fully committed to the project, meaning when we organize the final financing and the final package, and we sign the dotted line, then we’re committed to making this work financially and otherwise then we’ll be committed,” he said. “Before we get there we want to make sure that through studies and analysis we know exactly what we’re going to build, how much it’s going to cost and what our profitability is going to be.”

Fox and Rich Mayer, CEO of Thunder Butte Petroleum Services, and the tribal business council are continuing to work on the project, Fox said. “We continue to hammer away,” he said.

“If we hadn’t had this change in market and the price of oil hadn’t dropped so much and cut our revenues in half, I am confident we would be on a much faster track to completion than we are today. But the change in the oil caused change in everything on Fort Berthold and all our plans, and the refinery being what we call a downstream project fell into that too,” he said.

The tribal refinery project has been in the works for more than a decade.

Fox said there have been other dramatic changes in the oil development on Fort Berthold.

“We’ve got dramatic changes to the upstream which is the drilling and the production. We’ve got dramatic changes now on transportation and midstream,” he said. He said, “Rail and pipe are really the only two ways you can get it out, and there’s all kinds of concerns with that.”

Into that mix, within about a month and a half after he became tribal chairman, the market began to decline even more.

He said that caused him and council members to reassess their outline for the refinery project. “If we’re going to build the refinery, then we’ve got to make sure it’s feasible and profitable. This is the people’s money. We have to do that,” he said.

He said they questioned if the refinery can be redesigned and built in such a way that it will cost less. “Instead of spending $500 million, maybe we can build it for $350 to $400 million and that would save a lot of money,” he said.

“And why is saving a lot of money important? That leads to the second important thing is how do we pay for it?” he said. He said previously the council and the previous administration’s plan was to use the tribes’ revenue.

“Those revenues just don’t exist. We couldn’t today even if we really, really wanted to plop down $400 million and build this facility. And we wouldn’t anyway. Why? Because we’ve got houses to build, we’ve got crime to fight, we’ve got our environment to protect. I can go on and on about the needs of the tribe,” Fox said.

“That means what little revenue we’re getting now compared to two years ago, we’re stretching out as far as it will go for road repairs and taking care of our people,” he said.

He said the change in the refinery project is the tribe itself is not going to finance it 100 percent. “We’re going to go out in the market and do typical financing for the project. We’ve been wrestling with that for some time,” he said.

He said they are continuing to streamline those plans on a daily basis on how to finance and built the refinery.

Currently some first phase preparation work is being done at the refinery site, financed with tribal money.

“We are still committed to building it. It’s just that we’re trying to get these two key items dealt with before we do,” Fox said. “One way or another, the tribe has already invested a lot of money into site development for this project.” He said they want to make sure they get a good return on their investment and anything else they invest dollars in. As chairman, Fox said he’s confident if the entire refinery project is properly done that it can be a good, profitable project.

Fox said the tribe is also getting involved in another level, the upstream side, with production. “We’re drilling our own wells,” he said. He said Missouri River Resources, a tribally chartered company that does oil and gas development, drilled four wells in the Mandaree area last summer that are doing very well. “So far it’s proven a good investment,” he said.

He said an organization under the tribe also is contemplating the construction of pipe within the reservation boundaries.

“The natural progression in this whole process is that the tribe will develop downstream opportunities too, which means a refinery, it means a gas processing plant and even power generation. These are three downstream activities that we’re greatly interested in developing or moving in the direction to develop,” Fox said.

“Really what the strategy is from extracting that oil out of the ground into selling it off the reservation to a market all that the tribe is getting involved with instead of just sitting back and collecting the few taxes and some royalty and letting the rest of industry do what they want.

“This is our way of taking control of our own economy from beginning to end. At least until that product leaves the reservation it’s tribally done rather than having somebody else come in and doing it,” he said.

___

Information from: Minot Daily News, https://www.minotdailynews.com

LOAD COMMENTS ()

 

Click to Read More

Click to Hide