State-owned minerals projected to generate $8 billion in future royalty payments

BISMARCK, N.D. (North Dakota Monitor) — State-owned minerals are projected to generate $8.4 billion in future oil and gas royalties over the life of North Dakota oil production, benefiting K-12 education, according to an annual analysis.

The projected royalties’ benefit to the Common Schools Trust Fund, as well as emerging innovations in the industry driving productivity despite low oil prices, are positive trends for state officials who received the update last week.

“This is always my favorite board meeting,” said Michael Howe, North Dakota secretary of state and a member of the Board of University and School Lands. “It makes me excited for the future.”

Joel Brown with Mineral Tracker, a subsidiary of First International Bank and Trust that performed the analysis, said he observed several promising developments in the oil and gas industry.

Joel Brown presents Mineral Tracker’s valuation of state-owned minerals to the Board of University and School Lands on Dec. 11, 2025. (Photo by Jacob Orledge/North Dakota Monitor)

“We’ve seen a lot of really positive things as far as operators reaching into new areas where they hadn’t previously been drilling, accelerating development of areas that prior wouldn’t have been drilled before,” Brown said.

North Dakota collected $455 million in oil and gas royalties on state-owned minerals in fiscal year 2025. Royalties are generated based on a percentage of production from wells the state has an interest in.

That revenue is deposited in trusts managed by the Department of Trust Lands, with oversight from the Board of University and School Lands, that are invested and used for specific purposes.

The largest trust is the Common Schools Trust Fund, which is used to support K-12 education. The fund will disburse $585 million during the 2025-27 biennium, which will account for 24% of the state’s share of per-student education funding.

The Common Schools Trust Fund is valued at $7.94 billion, an increase from $7 billion at the end of the previous fiscal year.

“That is very nice growth year over year,” said Joseph Heringer, land commissioner. “Almost a billion dollars of growth.”

Mineral Tracker estimates the value of the state’s minerals to be $2.17 billion at this time. This marks the third year in a row the value has decreased. But Brown said there is a “very strong correlation” between the minerals’ value and the price of oil.

“We saw a 12% decrease in value from last year,” Brown said. “That was largely just related to oil prices.”

The value of the minerals will naturally decrease over time as more oil is extracted, leaving less and less remaining in the ground.

“These reserves are being liquidated each day as the wells continue to produce and generate royalties,” Brown said.

Neither the valuation or the projected royalties factor in the potential for further technology improvements such as enhanced oil recovery. Some projections suggest that technology could enable additional oil production equal to everything that has been extracted from the Bakken since the 2000s, Brown said.

“The size of the prize is very significant,” he said.

North Dakota Monitor reporter Jacob Orledge can be reached at jorledge@northdakotamonitor.com.