Minerals Management
The Minerals Management Bureau is responsible for leasing, permitting, and managing approximately 4,479 oil and gas, metalliferous and non-metalliferous, coal, and sand and gravel agreements on 1.8 million acres of the available 6.2 million acres of school trust lands and approximately 1,800 acres of other state-owned land throughout Montana.
Annual Reports
2008 Fiscal Year Minerals Management Bureau Annual Report (pdf)
2007 Fiscal Year Minerals Management Bureau Annual Report (pdf)
2006 Fiscal Year Minerals Management Bureau Annual Report (pdf)
2005 Fiscal Year Minerals Management Bureau Annual Report (pdf)
2004 Fiscal Year Minerals Management Bureau Annual Report (pdf)
Mineral Leasing
The mineral leasing program is responsible for reviewing and processing all mineral lease and permit applications; advertising, competitively bidding, and issuing new leases; reviewing and approving lease assignments; and collecting, verifying, and posting lease rentals and production royalties.
Oil and Gas Leasing
The program is responsible for the leasing and monitoring of 4,653 oil and gas leases, 606 of which are currently productive. The number of oil and gas leases managed is up 7.0 percent, while the number of currently producing leases increased by 3.9 percent, compared to FY 2007. Activities related to existing leases include collecting, verifying, and posting rental, royalty, delay drilling, and shut-in payments; reviewing and approving assignments and tracking working interest ownership; reviewing and preparing for approval of communitization agreements and unit operating agreements; and coordinating with field offices the review and approval of all proposed physical operations on state leases. In addition, four oral auctions of new oil and gas leases are prepared and conducted each year.
In FY 2008, school trust grants will receive over $31.2 million attributed to oil and gas leasing alone. Nearly 2 million barrels of oil, 7.8 million MCF (thousand cubic feet) of natural gas and 1.5 million gallons of condensate were produced in FY 2008. Record high oil prices - averaging more than $87 per barrel - helped make this fiscal year the most successful royalty revenue year in the Bureau’s history.
Other Mineral Leasing
The program also administers a wide variety of leases for all other mineral activity on state trust land including metalliferous and non-metalliferous leases, coal leases, gravel permits, and land use licenses for non-mechanized prospecting. In FY 2008, 4.7 million tons of coal was mined, which is a 63 percent increase in production over FY 2007. The average price per ton increased nearly 14 percent from FY 2007 for an average price of $10.87 per ton. Coal Royalties increased 57% compared to FY 2007 to more than $5.8 million. The volume mined can vary significantly from year to year, as mining activity moves onto or off state trust land within the normal sequence of mining operations. Royalties and rentals are also collected for minerals such as bentonite, clay, gold and associated minerals, peat, and shale.
Royalty Auditing and Accounting
The royalty audit program provides additional revenues as a result of programmatic audits. The program identifies royalty under- and over-reporting, rectifies discrepancies, and raising the level of voluntary compliance. Most audits have a single payor and involve multiple leases.
Audit activity increased in FY 2007 with eight audits completed. Six audits had preliminary assessments due ranging from $2,061 to $51,282 and two audits were closed having no audit findings. An additional 9 audits are in progress, three with preliminary assessments of amounts due ranging from $3,862 to $621,422.
Riverbed Leasing
Minerals Management Bureau continues its efforts to clarify title to the beds and islands of navigable rivers. The state owns, pursuant to statute, those lands below the low-water mark, islands and their accretions formed in the riverbeds after statehood, and abandoned channels formed by avulsion (Click Here for more information and a list of Navigable Waterways.) Because two navigable rivers in Montana flow through areas with major oil and gas resources, the department has conducted numerous riverbed studies to determine and document state ownership of land. This process allows the state to take a progressive position in issues involving substantial royalty dollars.
In FY 2007, the program managed 27,204 acres of leased riverbed and island tracts. These tracts provided the state with $575,300 in oil and gas revenues while generating an additional $559 from other mineral leasing activity. This same ownership review process is also becoming increasingly important in areas where surface development and/or use encounters beds, islands, and abandoned channels of navigable rivers. The department continues to work with state, Federal, and private entities whenever ownership issues arise.
Otter Creek Tracts
On October 13, 2006, the Federal Surface Transportation Board (STB) issued its Final Supplemental Environmental Impact Statement on the proposed Tongue River Railroad. At fiscal year-end, the STB had not issued a decision on the Tongue River Railroad application. Great Northern Properties continued to evaluate its potential interest in leasing or participating in development. The DNRC remains interested in leasing the school trust coal ownership at Otter Creek for exploration and development.
