North Dakota's Legacy Fund, which went into effect last year, has taken in more money than originally anticipated due to higher oil prices this year and galloping production from the Bakken Shale oil field, State Treasurer Kelly Schmidt said Thursday.
The fund, which was created by a ballot initiative in 2010 and took effect last July 1, now contains about $353 million, Schmidt said. With a $44.8 million deposit into the fund earlier this week for May, the total puts North Dakota well ahead of its earlier target of accumulating $600 million by June 30, 2013.
"With productivity in the state, we continue to see the revenues coming in," Schmidt said.
Original state forecasts were based on a $70/barrel oil price, she said, although late last year oil climbed to around $100/b. It has since retreated to the $90s/b.
"It [fund money] is accumulating way faster than expected," said Joe Morrissette, a budget analyst for the North Dakota Office of Management and Budget. At this rate, "we could be on pace to collect $1 billion" before July 2013, he said.
Although the fund after only 10 months has surpassed the halfway mark to the hoped-for $600 million, it is farther ahead than it might appear because the second year of the fund was targeted to contribute more than 50%, Morrissette said.
On Tuesday, Lynn Helms, director of the North Dakota Department of Mineral Resources, announced that the state in March had surpassed Alaska to become the US' second-largest producing state with 575,500 b/d of oil output. State officials had expected North Dakota to overtake Alaska at some point, but not until year-end 2012.
In February, North Dakota produced 558,000 b/d and in January 546,318 b/d, according to the Mineral Resources Department. Industry analyst reports calculate about 215 rigs were working in the Bakken Shale last week.
North Dakota's Legacy Fund siphons off 30% of oil and gas taxes and cannot be touched until 2017, after which only the interest will be used for the state's general fund, according to the original terms. However, the legislature can opt to spend up to 15% of the fund's principal during each biennium.
"The principal could be touched, although right now that's not the intent," Morrissette said.
North Dakota is one of a few US states that have accumulated money in a permanent fund underwritten by oil and gas monies. Alaska has had such a fund for decades, Texas for over a century, and West Virginia -- which is gathering revenues from the Marcellus Shale there -- is pondering it.
