Minerals Council

Minerals Council discusses TERA options in Zoom webinar

The Osage Minerals Council hosted a Zoom webinar update about a possible Tribal Energy Resource Agreement on Aug. 9. Screenshot of osagenation-nsn.gov

The Osage Minerals Council held a Zoom webinar to present another community Tribal Energy Resource Agreement update on Aug. 9. The Zoom call allowed Osage citizens and headright holders who could not make the in-person community TERA meetings in Grayhorse on May 10, Hominy on May 17, and Pawhuska on May 24 to learn and ask questions about the ongoing TERA agreement.

Wilson Pipestem of Pipestem & Nagle, P.C. joined the webinar to explain the options that the council is weighing for the TERA agreement. Pipestem explained that contradictory to what many Osages and headright holders believe the Osage Minerals Council does, they do not manage the mineral estate.

“The role of the tribal council, which is similar to what it is right now, is you get after the BIA,” Pipestem said. “So, the question with the TERA is whether or not we’ll continue with the status quo of we’re just relying on the Bureau of Indian Affairs to handle the majority of the management.”

The council, Osage Nation Congress, Office of the Chiefs, and Consultants did a market analysis, technical analysis, financial analysis, economic analysis, and environmental analysis to plan what the TERA would look like, according to the presentation.

The market analysis looked at positions and salaries. The presentation showed an opportunity for nine additional positions added to the existing 15 positions that currently manage the mineral estate. The technical analysis identified how to satisfy the federal requirements to enter into a TERA. A financial analysis asked the questions; what is the cost of a TERA and how will the minerals council fund the TERA?

The economic analysis looked to make sure headright holders would receive more money with a possible enhanced permit approval process and increased production. Lastly, an environmental analysis showed that a TERA would allow the council to avoid federal triggers such as complying with the Nation Environmental Policy Act, according to the presentation.

Improving oil and gas production

Pipestem explained three options the council is looking at to improve oil and gas production on the Osage reservation. A TERA, a compact contract, or a combination of the TERA and a compact contract. The team did a Strength, Weakness, Opportunity and Threat analysis, or SWOT analysis, to find the internal strengths and weaknesses and the external opportunities and threats for each option.

The option of a TERA allows for better management over internal controls. It gives the council the ability to approve leases and business agreements without going through the BIA. Plus, it gives the council control over the environmental review, approval, management, and enforcement of agreements.

The strengths of a compact contract differ from a TERA. A compact contract allows for recurring annual funding, budgeting, and reassigning funds, and the funds could carry over into the following year.

The combination of a TERA and a compact contract combines the strengths of a TERA and the compact contract. A difference between the TERA by itself and the TERA combined with the compact contract is the tribe will not manage everything. The BIA would still have some management capabilities, according to the presentation.

The SWOT analysis for a TERA or a TERA and compact contract combined shows there is a negative perception of the council working with the Osage Nation. Also, there is a concern of a negative impact on the trust relationship the Osage has with the federal government. Lastly, the concern is that both a TERA and a compact contract would require additional funding for the management of the mineral estate.

One difference is that a compact contract has differing weaknesses from the other two options, according to the presentation. Federal triggers that cause a hold on leasing approvals would still be applicable. Responsibility of federal functions would be shared with the Nation. Also, headright holders fear the council would control the accounting of quarterly payments, which Pipestem denied.

“One of the things we cannot negotiate in a TERA, or a compact contract is the authority of the United States and obligation of the United States to collect monies to invest them and then distribute them every quarter. That’s something that we couldn’t change if we wanted to,” he said.

All three options have similar external opportunities, he said. All three options allow for the Osage Nation to flex tribal sovereignty. As well as an increase in business activity, oil and gas production and headright holder payments. Some differences between the three, the TERA and compact contract with a TERA would allow for a return to quarterly lease sales. While the compact contract and a compact contract with a TERA would allow for a government-to-government relationship.

Fear of retaliation

There were two threats discovered in the SWOT analysis, and they apply to all three options. There is a fear of retaliation from the Bureau of Indian Affairs and concern about Governor Stitt’s relationship with tribes.

Pipestem said, “The thing that’s driving some of you that read the news is Governor Stitt’s concern that somehow tribes are going to treat oil and gas companies badly. It’s the exact opposite in the case here at the Osage Nation.”

The minerals council and Pipestem discussed other details including expenses and what cannot be in a TERA, before answering questions from the public.

The TERA webinar, along with each in-person TERA meeting, can be found on the Osage Nation YouTube page.