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Governor candidates call for audit of North Dakota Oil and Gas Division

BISMARCK - Two gubernatorial candidates from opposing parties called Thursday for an audit of North Dakota's Oil and Gas Division, raising concerns that production numbers are not being verified and citing a tip that employees were ordered to des...

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Natural gas is flared Friday, Sept. 25, 2015, at the Hess Corp. gas plant in Tioga, N.D., due to maintenance issues. Amy Dalrymple/Forum News Service
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BISMARCK – Two gubernatorial candidates from opposing parties called Thursday for an audit of North Dakota’s Oil and Gas Division, raising concerns that production numbers are not being verified and citing a tip that employees were ordered to destroy public records – a claim the agency’s spokeswoman called “completely baseless.”

Republican candidate Paul Sorum of Bismarck and Democratic hopeful Marvin Nelson, a state representative from Rolla, held a joint press conference in Bismarck to call for a performance audit of the division within the Department of Mineral Resources.
“This is not a partisan issue, which is why Marvin and I and many other people are on the same page. We just want the law to be followed,” Sorum said.
Both candidates said they had planned to hold the press conference next Monday but moved it up after they were contacted by an attorney for a division employee who claimed Mineral Resources Director Lynn Helms ordered the destruction of emails and records related to the transportation and sale of oil.
Sorum and Nelson said they had no proof that records were destroyed. The attorney asked not to be named publicly because it would identify the employee, they said, agreeing that the state’s whistleblower laws provide inadequate protection.
“Even without those rumors, there’s still significant reasons why we should be do that (audit), and it should be urgent that we do that,” Sorum, an oilfield consultant, said in an interview.
Division spokeswoman Alison Ritter said the allegation of destroying records was untrue.
“That’s completely baseless," she said. "I think it’s just absurd, actually.”
Ritter added that the office had a staff meeting Wednesday which involved making sure staff were reading the code of ethics policy, which includes a page related to records and making records available.
Sorum and Nelson said they did not contact Attorney General Wayne Stenehjem, chief enforcer of the state’s open records laws, about the report of records being destroyed. Stenehjem, who is the Republican Party’s endorsed candidate for governor and also serves on the three-member Industrial Commission that oversees the Oil and Gas Division, “is part of the problem,” Sorum said.
Stenehjem was on the campaign trail and could not immediately be reached for comment. Fargo businessman Doug Burgum also is seeking the GOP nomination in the June 14 primary.
Sorum said a recent audit of the state Department of Trust Lands that identified errors in how oil and gas royalty payments were made underscores the need for an independent audit of the Oil and Gas Division, which oversees about 13,000 active oil and gas wells.
A bill co-sponsored by Nelson last year would have required a performance audit of state agencies that regulate oil and gas development, but House lawmakers rejected it 67-22.
Nelson serves on the Legislative Audit and Fiscal Review Committee, which has the authority to request performance audits, but he couldn’t recall if there had been a formal request for a division audit.
He said mineral owners who receive oil and gas royalty payments often receive revised settlement sheets notifying them that a mistake was made, which indicates production numbers aren’t being adequately tracked and shows the need for an audit so mineral owners don’t get shortchanged.
“There’s really a public responsibility to get it right,” he said.
Ritter noted the state auditor’s office recently completed a routine audit of the agency for the 2013-15 biennium and there were no formal findings for the Oil and Gas Division and a few formal findings for the Industrial Commission.

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