WorldWide Drilling Resource

38 APRIL 2015 WorldWide Drilling Resource ® Energy Development on Tribal Lands Part 2 Republished with permission of the Bakken Oil Business Journal, www.bakkenoilbiz.com/digital- journal. Written by Marianne Kaelberer (Copy Editor) and Chris Bischof (Executive Editor) Fractionated land is another prob- lem faced by a company that would like to develop energy on t r ibal land. Fractionation is individual trust land that was passed in equal shares to multiple heirs. Much of this land has become so fractionated that there are hundreds or even thousands of heirs. The inability of the heirs to agree on energy development decisions raises the cost of developing resources and reduces the benefits for individual own- ers, thereby causing much Indian land to remain idle. Thus, the complicated system of land ownership on reservations makes energy development, as well as eco- nomic growth, extremely cumbersome. It’s not unusual for several years (some- times as long as 10 years) to pass before various agencies approve energy devel- opment projects on Indian lands; the same approval that takes only a few months on private lands. And, at any time, a federal agency can demand more information or just shut down develop- ment activity entirely. Some tribes have managed to over- come these obstacles; they have suc- ceeded in developing their resources for the benefit of the entire tribe. The Southern Ute tribe in Colorado has successfully developed its energy resources. They own and operate five energy companies. Recognizing their lack of expertise in energy develop- ment, they contracted with outside experts to develop the energy on their reserva- tion. They’ve had tremendous success. So successful were they that a tribal- owned energy company, Red Willow Production Company, is engaged in oil, gas, and coalbed methane extraction throughout the western United States. These days it operates or has an inter- est in over 1800 wells. The Sal ish-Kootenai Tr ibes in Montana took over more than 100 pro- grams previously run by federal agen- cies on their Flathead Reservation. The result is better management of their energy resources and thereby, increased revenue for the tribe. Among them is their acquisition of the Kerr Dam and the establishment of a whole- sale power generation corporation. Another example of an Indian tribe that has been successful is the Navajo Nation in New Mexico. They purchased the Navajo Mine in 2013 and are now providing coal to New Mexico’s Four Corners Generating Station. The tribe paid $85 million for the mine, which produces 8.5 million tons of coal annu- ally. These examples of the success Indian tribes have achieved when they manage their own resources reveal the inherent abuse of government controls over tribal activities. If legislators and pol icymakers would free the tribes from regulatory interference, enormous economic benefits would flow to the tribes and the companies contracted to develop the energy resources on reser- vation land. It seems unconscionable to stand in the way of such opportunity.