Fast-rising Bakken production combined with strong oil prices is fattening the North Dakota Legacy Fund ahead of anticipated growth, State Treasurer Kelly Schmidt said May 17.
Created in 2010 by a ballot initiative, the fund takes in 30 percent of all state revenue derived from oil and gas production and extraction and now stands at $353 million, putting the state comfortably ahead of its goal to reach $600 million by June 30, 2013.
No principal or earnings of the fund can be spent before mid-2017, at which point only the interest earned will go into North Dakota’s general fund.
However, the state legislature can then approve expenditure of up to 15 percent of the principal at each two-year interval.
Schmidt said initial forecasts were based on oil prices of $70 per barrel.
At the current rate of accumulation, the fund could be on pace to reach $1 billion by mid-2013, said Joe Morrissette, an analyst with the North Dakota Office of Management and Budget.
The latest data released by the North Dakota Department of Mineral Resources puts state production at 575,000 barrels per day, while industry analysts estimate about 215 rigs are working in the Bakken.
North Dakota, Alaska and Texas are the only states that have diverted oil and gas revenues into permanent funds.
West Virginia is contemplating joining those ranks and setting aside a portion of mineral revenues, but so far two bills have been rejected by the state legislature, leaving lawmakers to reconsider ways to structure a nest egg.
—Gary Park
