Mt's battle over oil and gas $$$. West vs East

[Faster horses]

This is an article that ran in our local paper last week.

Battling for gas and oil money
By Angel Wyrwas
Tempers were running hot this past week as
the Governor's Bill, HB 136, took its turn to be
heard in front of the House Education Committee.
School officials from across eastern, rural
Montana on Wednesday blasted Gov. Brian
Schweitzer's school-funding plan as "divisive"
and unfair, saying its multimillion-dollar transfer
of local oil and gas revenue to the state pits
school district against school district over
money. Many school officials from oil and gas
producing counties drove hundreds of miles to
Helena to testify during the three hour hearing.
School Board member Mike Gunderson, Commissioner
Don Rieger, and Lobbyist Willy
Duffield were in Helena to represent Fallon
County.
Audio recordings of Wednesday's hearing
have now been posted on the 2011 Legislative
Session website at
http://www.leg.mt.gov/css/Committees/Session/
Minutes/AudioMinutes.asp?MeetingID=1
208. Montana Rural Education Association
(MREA) encourages every rural school advocate
to review this recording of the hearing and
the disturbing comments that were made.
Dan Villa, Schweitzer's education policy adviser,
said many districts receiving the oil and
gas money have been underestimating their
share of those funds in their budget, but that they
get to keep any extra money. "This chart clearly
shows that the current funding mechanism does
not equitably distribute state revenues," he said,
distributing a sheet showing which districts received
the money. "To ensure that Montanans
all over the state have equal access to resources,
we should pass this bill." Supporters of HB 136
believe the current system is unfair.
During her testimony, Billings Public School
Trustee Connie Wardell made comments that
were extremely derogatory in nature to communities
involved in oil/gas development. Trying
to "make the case" that the families of oil workers
live in Billings, she stated: "You don't take
children into oil camps…." Wardell was criticized
by opponents of the bill for her uneducated
assumption of oil and gas communities
and the fact that the schools in eastern Montana
educate resident children, not 'oil camp' children.
Following Wardell's testimony Jeff Green-
Field, Billings Teachers Union, discounted the
need for funds to address deferred maintenance
in Baker and other school communities involved
in oil/gas production saying Billings should get
the money for their serious deferred maintenance
problems.
School officials from Cut Bank to Sidney defended
their need for and use of the oil and gas
funds, and said that taking away 90 percent of
that money - as HB136 does - will lead to huge
property tax increases for taxpayers in their districts.
"Don't be fooled," said Sidney School
Board member Kelly Dey in an email, "The attempts
to grab more of the oil and gas revenues
generated by eastern Montana (the state already
takes 52%) will adversely affect every single
person who lives in eastern Montana." Dey
states that local property taxes will rise and requesting
mills will be necessary to adequately
fund programs and facilities.

There are several bills that propose
to redistribute oil and gas revenues,"
said Baker Superintendent
Don Schillinger, "but HB 136 is the
most devastating." Schillinger
spent the past week in Helena
meeting with Representatives and
Senators, Joe Brott-Director of Policy
Services for the MT School
Board Association, Lobbyists
Willie Duffield and Ken Morrison.
"These are powerful people," said
Schillinger, "and many of them are
working against this bill for Fallon
County and other oil and gas counties
as well."
In addressing the selfish nature of
the previous AA School Testimony,
Rep Stahl of the Saco/Malta area
cited the following Centrally Assessed
Revenues currently being
received annually by Montana's
AA Schools Communities: Great
Falls receives $12.6 million per
year, Bozeman receives $7.8 million
per year, Helena receives $16
million per year, Missoula receives
$13 million per year, and Billings
receives $23 million per year.
"None of that funding is shared
with other school communities
across the state. Should the eastern
side scream that's unfair?" said
Stahl.
In a press release from February
8, 2011, Montana's Senators Max
Baucus and Jon Tester detail yet
another revenue source that isn't
equally shared across Montana.
Right now the Senators are urging
the Obama Administration to provide
a long term renewal of a critical
program for Montana counties
in its 2012 budget request. In fiscal
year 2011, the Secure Rural
Schools program alone is projected
to deliver almost $23 million to
Montana counties, but the program
is set to expire September 2011.
Montana rural counties depend on
this funding, as well as the Payment
in Lieu of Taxes (PILT) program
that will expire in September
2012.
Montana's top recipients under
the Secure Rural Schools program
and the Payment in Lieu of Taxes
Program between 2008 and 2010
are as follows: Lincoln, Flathead,
Ravalli, Sanders, Lewis & Clark,
Beaverhead, Park, Missoula, Gallatin,
Powell, Mineral, Madison,each of these counties. However,
note that not a single county in
eastern Montana receives a share of
these revenues."

Kelly Dey says now is the most
critical time to communicate to
your legislators and the members
of the House and Senate Education
& Appropriations Committee that
you do not agree with HB 136.
Contact information can be found
following this link:
http/leg.mt.gov/css/About-the-
L eg i s l a t u r e / L aw m a k i n g -
Process/contact-legislators.asp.

 

[Big Muddy rancher]

What I don't understand is why North Dakota has around 180 rigs drilling and Montana has 8?
Is it the royalty structure in MT keeping them out or the environmental regs? :?

 

[Lonecowboy]

well maybe this will turn out to be a good thing- let them take the money and just shut down all eastern MT schools. we can all just homeschool our kids. wait will we have to still pay taxes too??
so our taxes will go to pay for western MT children while we home school ours. are we the slaves of western MT??


right now 60% of our taxes go to fund education, out of that, 50% goes to administration, so 30% of all our MT tax dollars goes to administrators.
some of whom make over $100,000.00/year while the median wage in MT is around $31,000.00. we are already sucking hind tit, now they want to take that tit too!

Thanks Schwietzer! he has broke us, I hope the repubs will hold his feet to the fire and expose what he has really done to us. don't let him kick the can down the road again. the bennies to state workers is underfunded to the tune of around 1 billion- and BS lies about "we have money in the bank" yes we do about 1/3 enough to cover all the bills!

that's why he is trying so hard to come up with extra cash.

 

[Newt]

BMR,

I know that the tax structures are different between MT an ND but I heard on another blog that although there are leases in Sheridan,Roosevelt and Richland Counties in MT the companies still have to drill in ND to hold there leases over there. I expect there are only so many rigs to go around.

 

[Lonecowboy]

BMR,

I know that the tax structures are different between MT an ND but I heard on another blog that although there are leases in Sheridan,Roosevelt and Richland Counties in MT the companies still have to drill in ND to hold there leases over there. I expect there are only so many rigs to go around.

My understanding on this is limited, but here goes what I think I understand about it:

ND- tax moritorium 2 years,-- MT 1

ND - business equipment tax 0%-- MT 3%

+ enviromental regs and permits, workmans comp. etc. all are just less production friendly in MT

but our State legislature is currently working on rectifying some of that.

 

[Anonymous]

BMR, Montana has been unfriendly to almost all industries except agriculture and tourism for generations. About a third of the coal used in the US comes from eastern Wyoming. What is significant about this is Montana actually has more coal than Wyoming. The coal seam in eastern Wyoming starts at a point in the very northern end of Converse county and widens out in a funnel shape going thru Campbell county on up to the Montana line. Upon reaching the stateline the coal seam baloons out to cover a large portion of southeastern Montana. Until very recently the state of Montana wouldn't even hardly discuss exploiting this large fuel reserve. They do have a couple of small surface mines in this area, but not nearly enough to come close to making the money they could be getting. It has been my understanding that between the taxes and environmental regs, no companies were willing to make the investments needed when they could just go to the neighboring states and conduct their business alot cheaper.

 

[Faster horses]

:agree:

Good post, BAR BAR 2.

And BMR I heard today that North Dakota has 130 rigs.
I need to look into that a bit more.

I do know Bar Bar 2 is right on with his post. Been there...

 

[hypocritexposer]

Schweitzer was on my list of people who I think would've made a superb VP for President Obama. He has a Clintonesq­ue ability to connect with voters, especially blue collar males who Obama doesn't do as well with.

http://www.huffingtonpost.com/2011/02/25/democratic-governor-to-walker_n_828363.html


:lol:

 

[Tam]

:agree:

Good post, BAR BAR 2.

And BMR I heard today that North Dakota has 130 rigs.
I need to look into that a bit more.

I do know Bar Bar 2 is right on with his post. Been there...

Published February 21, 2011, 12:00 AM
Winter hard on North Dakota's oil output but records keep getting set
The rough winter has slowed oil production in western North Dakota more than normal, but a record number of drilling rigs active in the state was reached Friday, according to the state's top regulator
By: Stephen J. Lee, Grand Forks Herald

snip

as of Friday, there were 171 drilling rigs active in the state, a record, breaking the previous record of 166 set in mid-December, according to numbers from the mineral resources department

here is some more on ND

Posted on Wednesday, January 05, 2011 7:03:33 AM by upsdriver

BISMARCK - North Dakota's oil patch is setting more records with 1,676 new permits issued for oil and/or gas wells drilling in calendar year 2010, according to Bruce Hicks, assistant director of the N.D. Oil and Gas Division in Bismarck.

That is more than 1,000 permits more than were issued in calendar year 2009 when 623 permits were issued. In 2008, the division issued 1,043 permits.

The previous record was set in calendar year 1981 when 1,098 permits were issued, Hicks said Tuesday.

"It appears 2011 will set another permitting record," Hicks said. "It is anticipated that between 160 to 200 rigs will be operating in North Dakota during the year, which will require approximately 2,000 permits."

 

[hypocritexposer]

What restricts the number of rigs?

If the potential to make money is there, oil companies will contract the building of more rigs.

Oil companies are also always entitled to renting/contracting additional rigs from other companies.

Alberta quite often has idle rigs.


More often than not it comes down to the "greenies" thinking that other Countries should be exposed to the perceived environmental burdens of producing oil for American usage, while restricting those environmental burdens on themselves.

 

[Anonymous]

Hypo, right before the last presidential election, and right before our boom went bust I was working for a drilling company here welding on old rigs and building new ones. The last two rigs we built cost in the neighborhood of 10 to 12 million dollars.
Due to the cost of building new rigs, most companies don't want that much of an investment commitment not knowing what the future is going to hold. At a moments notice they could be shut down for any number of reasons. For example, look at the moratorium in the gulf. Even after the judges said it couldn't be done, it was done. Not wanting to get into the D and R thing, but the fact remains, the D's aren't as friendly towards drilling as the R's.
Most oil companies are wanting to hire the newer top drive, fully computerized rigs. The problem is most of the drilling companies have the older bottom drive non-computerized rigs. Like most other drilling companies, the outfit I was working for was spending less money to convert and update their older rigs. Once again, the cost difference of converting the old rigs rather than building new rigs is pretty significant. Another thing is the time it takes to do this and yet again the uncertain future.
Most of the oil companies will also try to schedule their drilling so they can use fewer rigs in one area due to the cost of moving. Just to move a moderate sized rig usually runs around 50 grand. That may not seem like much, but when all of the other factors are fgured in, it adds up. If the drilling outfits can get the work for fewer rigs in an area for a longer time that's most likely what they will want to do. That way they don't have to spend the extra money to convert the old rigs or hire more men for a shorter time.

 

[Big Muddy rancher]

Where my son in law is working they are drilling 4 holes to a lease. The rig moves it's self around the site with hydraulics. Never seen one of them but they don't move very often.

Hypo do you ever get through Sylvan Lake? The Nabors yard there was jam packed with idle equipment last year at this time.

 

[Anonymous]

I built a couple of new rigs that were walking rigs and also refitted a couple of old rigs to be walkers. Its a pretty neat deal but they won't win any foot races. That's a lot of weight to be moving around.

 

[Big Muddy rancher]

I built a couple of new rigs that were walking rigs and also refitted a couple of old rigs to be walkers. Its a pretty neat deal but they won't win any foot races. That's a lot of weight to be moving around.

Maybe you built the one he works on. He is with Cyclone but I can't remember the number.

 

[hypocritexposer]

Where my son in law is working they are drilling 4 holes to a lease. The rig moves it's self around the site with hydraulics. Never seen one of them but they don't move very often.

Hypo do you ever get through Sylvan Lake? The Nabors yard there was jam packed with idle equipment last year at this time.

Last time I was through Sylvan was about a year ago. Seems to have a bit since then, though.

 

[Anonymous]

I very well could have BMR. That's who I was working my rig truck for. Those folks have a lot of money.

 

[Anonymous]

I don't know how many rigs are up or pumping in eastern MT- but I do know that my neighbor who is pole climber- and the company he works for has been working for 3 years straight running power into drill sites- or future sites just in the Sidney area-- and they say they have 7 years worth of work on more sites in that area alone already lined up to get power to....

My understanding is that not only in MT- but in ND-- there are sites galore all ready to go-- just waiting in turn for the rigs....

All working the industry in this area tell me that eastern Montana will up to a boom as soon as the oil line coming down from Canada is built-- as they have contracts for space on the line and it gives them an outlet which has been holding up much of the pumping....

But that oil line still has to run the gauntlet between the radical left enviromentalists that oppose all oil-- and the radical right that don't want to allow any companies to use eminent domain to get access to the land they need to make the line work.....

 

[Lonecowboy]

I don't know how many rigs are up or pumping in eastern MT- but I do know that my neighbor who is pole climber- and the company he works for has been working for 3 years straight running power into drill sites- or future sites just in the Sidney area-- and they say they have 7 years worth of work on more sites in that area alone already lined up to get power to....

My understanding is that not only in MT- but in ND-- there are sites galore all ready to go-- just waiting in turn for the rigs....

All working the industry in this area tell me that eastern Montana will up to a boom as soon as the oil line coming down from Canada is built-- as they have contracts for space on the line and it gives them an outlet which has been holding up much of the pumping....But that oil line still has to run the gauntlet between the radical left enviromentalists that oppose all oil-- and the radical right that don't want to allow any companies to use eminent domain to get access to the land they need to make the line work.....

where's MT's oil supposed to get on that pipeline at???

 

[Anonymous]

I'm not sure how the new line is supposed to lay. But they just came thru this area headed north with one. They told me that its supposed to go thru eastern MT into ND and then east to Chicago I believe. It started in CO. They've been trying for years to get it built so they would have an outlet for some of the CO oil. The idea for the line didn't really take off until the Bakken field could be added onto it.

 

[Anonymous]

I don't know how many rigs are up or pumping in eastern MT- but I do know that my neighbor who is pole climber- and the company he works for has been working for 3 years straight running power into drill sites- or future sites just in the Sidney area-- and they say they have 7 years worth of work on more sites in that area alone already lined up to get power to....

My understanding is that not only in MT- but in ND-- there are sites galore all ready to go-- just waiting in turn for the rigs....

All working the industry in this area tell me that eastern Montana will up to a boom as soon as the oil line coming down from Canada is built-- as they have contracts for space on the line and it gives them an outlet which has been holding up much of the pumping....But that oil line still has to run the gauntlet between the radical left enviromentalists that oppose all oil-- and the radical right that don't want to allow any companies to use eminent domain to get access to the land they need to make the line work.....

where's MT's oil supposed to get on that pipeline at???

Not sure of the route after it goes thru Valley County and McCone County--but it keeps going south and east toward the major current oil producing part of MT...They went around the reservation- to avoid the possibilty of the tribes trying to stick a tax on the line like they did the Northern Border gas pipeline...