Beckoning the Bakken 

Will the oil boom reach Montana's impoverished Fort Peck tribes?

Page 3 of 4

The tribes' stake, Becker says, is still much more valuable than the roughly 3,000 acres the tribal government originally held within the 45,000-acre block. But as the tribal council turned over, as it does every two years, its members began to question whether FPEC was serving the tribes' interest. In 2011, the council bypassed its agreement with NARP and independently leased about 24,000 acres of tribal land to two oil companies for $6 million—or $250 per acre. Earlier this year, the council voted to terminate its agreement with NARP altogether, though FPEC remains.

Stoney Anketell, a council member and chair of its Oil and Gas Committee, and a veteran oilman himself, is among the more outspoken critics of NARP. He says the tribes' agreement with the company monopolized leasing, likely lowering prices paid to landholders. It also deterred other oil companies from doing business on the reservation, a situation that was only exacerbated by the two failed wells. Anketell calls those wells the "kiss of death" because they told the industry, "'Oh shit, the Bakken ends there'... That's a big thing to overcome."

Anketell's distrust of NARP stems partly from a lawsuit involving NARP President John Jurrius and the Ute Indian Tribe in Utah. In 2000, Jurrius became the tribe's financial adviser and helped it create an energy company, Ute Energy. Jurrius resigned in 2007. In 2008, the tribe banned Jurrius from the Uintah-Ouray Indian Reservation, and then later sued him, alleging that he "wrongfully and fraudulently" claimed an interest in Ute Energy. Jurrius countersued. They eventually settled the suits. Meanwhile, in 2008, Jurrius, in partnership with Becker, formed NARP.

click to enlarge Lynn Becker, vice president of Native American Resource Partners, points to a map behind his desk of the 45,000-acre block of reservation land owned by Fort Peck Energy Company and Samson Oil and Gas. - PHOTO BY AUSTIN SMITH
  • photo by Austin Smith
  • Lynn Becker, vice president of Native American Resource Partners, points to a map behind his desk of the 45,000-acre block of reservation land owned by Fort Peck Energy Company and Samson Oil and Gas.

NARP has other critics. Jay Daniels, who worked as a realty officer for the Bureau of Indian Affairs in Poplar for 20 years, says Jurrius "negotiated a bad deal for the Utes and then did the same thing at Fort Peck."

Ernie Bighorn, who ranches in Brockton and works with troubled youth, believes Becker didn't give his family and other tribal members a square deal. "We didn't have much choice," he says of the leases his family signed. "I mean, we did, but we really didn't know what we were doing, and we still don't."

Becker defends the leases. "Somebody who looks at this and says, 'Wait a minute, you paid $50 an acre and you sold to your partner for several times more than that,' that's true," he says. "But I created value by amassing this acreage ... We made all of this project doable by the fact that we put it together. So our sweat equity, if you will, is what's not being recognized in that." He also brushes off criticism of Jurrius' work with the Ute Tribe, pointing out that Ute Energy was acquired last fall for $784 million.

Becker says he wants to bring the same kind of wealth to the Fort Peck tribes. But all NARP's delivered are two wells that produced more water than oil. Becker is convinced the reservation will eventually cash in.

"Handling the water is an issue," he says. "It's just unfortunate. You know, this reservation is not the Fort Berthold Reservation, in terms of geology ... That doesn't mean that the secret of how to deal with the water won't be resolved in the future. That's highly probable. The nature of an exploration play is that the first one, two or three companies come in, and they build on the failures of the past companies, until finally somebody finds a successful answer."

•••

Coercion and happenstance put the Three Affiliated Tribes of the Fort Berthold Reservation—the Mandan, Hidatsa and Arikara—right above the deepest, thickest part of the Bakken. There, a couple hours due east of Poplar, 830 active oil wells were producing about 130,000 barrels of oil a day in mid-March. While the majority of those wells are on non-tribal lands within the reservation's boundaries, the tribes and individual tribal landholders are still receiving tens of millions of dollars a year in lease bonuses and royalties. The chairman of the tribes, Tex Hall, he of the "sovereignty by the barrel" mantra, told the Senate Indian Affairs Committee last year that oil development dropped the tribes' unemployment rate from upwards of 70 percent to 6 or 7 percent, which he said is "unheard of" in much of Indian country.

But the oil rush exposed the tribes to "what could be the biggest swindle of Native Americans in American history," as is alleged in a class action lawsuit over a land-grab that may have cost the tribes more than $1 billion.

The scheme centered on Spencer Wilkinson Jr., a longtime casino manager and member of the tribes' development corporation, who, in 2006, co-founded Dakota-3 LLC. Over the following two years, Dakota-3 and its partners allegedly brokered non-competitive lease agreements with the tribes and individual landholders covering nearly 90,000 acres. The company reportedly paid a total of $14 million for those leases—as little as $50 an acre—and then, in 2010, turned around and sold them to an Oklahoma oil firm for $949 million.

click to enlarge A pile of massive blue pipes sits along the highway east of Poplar. The tribes pump water from the Missouri River to the town after oil drilling contaminated local wells. - PHOTO BY AUSTIN SMITH
  • photo by Austin Smith
  • A pile of massive blue pipes sits along the highway east of Poplar. The tribes pump water from the Missouri River to the town after oil drilling contaminated local wells.

"Hundreds of millions of dollars were lost," Tex Hall recently told a ProPublica reporter. "It's just a huge loss and we'll never get it back."

As the Wall Street Journal reported in February, Wilkinson's attorney called the lawsuits "a case of seller's remorse," adding that Wilkinson and his partners, "like anyone else in America, were perfectly entitled to try to obtain leases ... on the best possible economic terms."

Fort Berthold exemplifies that the Bakken boom, should it reach the Fort Peck tribes, would come at a cost. For all the economic activity the boom brings to Fort Berthold, such as the oil refinery set to break ground this year, residents deal with its consequences. Last month, for example, the tribes issued a public notice warning that children might play with potentially radioactive filters used by the oil industry—filters too often illegally ditched in fields and community dumpsters along the road. Because they resemble nets, the tribes said, kids could mistake them for something suitable for fishing.

Deb Madison, manager of the Fort Peck Office of Environmental Protection, and a petroleum engineer by trade, says that as the boom nears—and she, too, suspects it will—all the tribes can hope for is "controlled chaos."

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