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Mineral Owners Hope to Recoup Royalties from Flaring

by Elizabeth Alford on March 5, 2016

Mineral owners in North Dakota are anxiously awaiting a court ruling that could pave the way for them to receive compensation for natural gas that was flared on their property.

Related: New Flaring Regulations Proposed

In 2013, mineral owners filed 14 lawsuits against oil companies claiming they were not paid for the gas that was illegally flared from wells. 13 of the cases were dismissed in district court, but one has made its way to the state supreme court and could set an important precedent for mineral owners in the state.

In December, North Dakota’s Supreme Court heard oral arguments in an appeal from Sarah Vogel, a mineral owner who claims she’s owed royalties from Marathon Oil for illegal flaring. A ruling in favor of Vogel would potentially open the door for dozens of class action claims.

 Derrick Braaten, one of Vogel’s attorneys, commented that “If the Supreme Court rules in our favor, then all of the other cases would be immediately refiled.” 

Oil companies are allowed to burn away some natural gas that occurs along with oil production, but they must follow certain rules set out by the state’s Industrial Commission. If a company breaks these rules, the law requires that they pay royalties and gross production tax on that gas. At issue in the appeal is whether mineral owners can bring their claim in courts instead of filing a petition with the Industrial Commission.

In December 2015, oil companies in North Dakota flared over 7.7 billion cubic feet of gas, which is enough natural gas to heat more than 80,000 homes for a year.

 

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