Tribal leaders from an American Indian reservation near Bakken proposed a new royalty fee for natural gas that is burned before it can be sold.
The Mandan, Hidatsa and Arikara tribes, known collectively as the Three Affiliated Tribes, sent its six-page plan to oil companies operating in the Fort Berthold Reservation, AP said Tuesday.
The plan calls for companies to pay royalties for flaring natural gas to make up for lost revenue when the used gas isn’t brought to market.
Oil production on the tribes’ reservation account for about a third of North Dakota’s daily output.
Tribal officials didn’t comment on the proposal.
Industry officials are questioning if the tribe can impose the fees and warned that increased royalties could slow production on the reservation.
In 2008, the tribes signed a tax agreement giving the government of North Dakota regulatory power over oil production on reservation lands.
State officials said they were unaware of the proposal and didn’t comment, the AP said.
Flaring gas is used during testing to determine pressure, flow and composition of product from a well.
Flares are also used as a safety mechanism to reduce the risk of fires and explosions.
In 2013, the Three Tribes broke ground on the first oil refinery ever built on an American Indian reservation.
The tribes partnered with Minneapolis-based Park Construction Co.
The refinery has a 20,000 barrels per day capacity and is expected to be operational in late 2015 or early 2016.