BISMARCK — North Dakota oil continued its slow inch back late this summer, but the industry experts warned not to expect that trend to continue the next few months.
After North Dakota crested a million barrels of daily production in July's production numbers for the first time since the start of the pandemic, the state brought a handful of additional drilling rigs online and added more than 122,000 barrels of production in the state's latest report.
Still, North Dakota Oil & Gas Director Lynn Helms said Friday, Oct. 16, that back-to-back months of growth should not necessarily be interpreted as a sign of a resurgent oil economy. As with last month’s report, Helms attributed a significant portion of the new growth to industry anxiety about a possible Joe Biden presidency, which he said has prompted producers to get kicks in while they still can, anticipating that a less fossil fuel friendly administration could lock out new drilling projects.
In addition to the short-term growth numbers in the Bakken, Helms reported the latest on the state's plugging and reclamation program, the $66 million CARES Act allocation designed to restore abandoned oil wells and put out-of-work oil workers back in the field.
On that front, Helms said the Department of Mineral Resources has fallen short of its original goal to plug and reclaim 400 wells, prompting the department to file an application to the state's Emergency Commission for permission to repurpose almost $17 million of the allocated CARES funds.
With the winter freeze fast approaching, Helms said the program will not have time to reclaim about 50% of the targeted wells. He pointed to unanticipated bidding and legal snags that delayed the start of the program.
“A lot of that pushed these confiscations out six or eight weeks, so we lost a month and a half to two months of time because of the extended legal process and then the procurement process of getting contractors on board,” Helms said, noting the reclamation program, which was approved in June, did not getting staffed to full strength until last week.
To beat a federally imposed Dec. 31 deadline on CARES spending, the department is hoping to designate the funds not used for reclamation towards oil company grants for hydraulic fracturing work, which Helms said would employ 500 to 1,000 oil workers before the end of the year and generate significant tax revenue for the state.
Wells that were left unrestored would still be reclaimed with non-CARES funding next summer.
Helms also laid out his expectations for the remainder of the year following next month’s presidential election, predicting that a Biden win could trigger an industry rush to drill new wells ahead of inauguration day in January. While much of the presidential conversation has been around speculations of Biden’s position on fracking, Helms noted drilling permits will be the higher priority for companies ahead of an administration turnover.
“If you get it drilled, you will be able to frack it, but if you don’t get a drilling permit, you can’t do much there,” he said.
As the economic ripples of the pandemic continue to stretch into the fall, crude oil prices have struggled to stay above the $40 mark, leaving the Bakken region well below the mark typically needed to justify sustained production.
North Dakota producers burned off 8% of the natural gas released during the oil production process, clearing the state’s goal to limit flaring to 9%, effective at the beginning of next month.
Readers can reach Forum reporter Adam Willis, a Report for America corps member, at email@example.com.