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Bakken is well positioned to handle increased activity

By Patrick C. Miller | March 08, 2017

If—as some have recently predicted—the Bakken shale play is on its last legs, it was difficult to detect based on presentations given during Energy Day at the State Capitol Building in Bismarck, North Dakota, on Tuesday.

Sponsored by the Bakken Backers—a coalition of businesses, leaders, workers and citizens—the event is held every other year during North Dakota’s legislative session to update government leaders on the state of North Dakota's oil and gas industry. 

“Industry has been spending billions of dollars on infrastructure in North Dakota,” said Dean Bangsund, an economist at North Dakota State University who studies the impact of the oil and gas industry on the state. “It bodes well for what industry feels is available to them in North Dakota,” he explained. “I don’t think we’d see this investment if things were going the opposite direction.”

As if to emphasize the point, Steve Johnson, vice president of government relations at ONEOK and ONEOK Partners, noted in another presentation that the company has invested $3.5 billion over the past five to seven years in North Dakota pipelines, gathering systems and processing plants.

“Our focus in 2017 is to expand gathering systems to meet completed and uncompleted wells,” he said. “In the last seven years or so, we’ve been trying to catch up with everything that’s been going on. Now we’re almost at the point where we can keep up. We’re willing to invest hundreds of millions more dollars as needed.”

Presenting the latest results on NDSU’s study of economic data provided by industry, Bangsund said the $11 billion spent on oil and gas in the state during 2015 doesn’t indicate an industry in decline. He also pointed out that in the state the size of North Dakota, the industry’s level of employment, government revenue and business volume remain a significant part of the economy. Nearly 20 percent of all private sector jobs in state are supported by oil and gas industry, Bangsund said.

This doesn’t mean the state’s oil and gas industry wasn’t hit hard the past two years by the low price of oil. Bangsund said the industry’s in-state expenditures fell by about a third from 2013 to 2015. He also noted that the $5.3 billion in state tax revenue was a 31 percent drop from 2013.

Still, according to Bangsund, each rig operating in North Dakota generates $150 million is gross business volume and creates 182 jobs. He pointed out that the increase in pipelines and rail transportation are driven by oil production—not oil price—and indicate a positive sign that the industry is becoming more stable.

North Dakota Lt. Gov. Brent Sanford, who served as mayor of Watford City at a time when the oil and gas industry was booming, said community collaboration helped the town get through the explosive growth, and that approach is now paying dividends.

After listing facilities built to help recruit and retain employees in western North Dakota, he said, “Now Watford City is ready. Other communities are in better shape to handle industry growth this time around.”

Kevin Black, president of Credence Energy Services in Minot, North Dakota, told about how he and other family members decided to start a chemical services company focused on scale remediation right before oil prices plummeted.

Through perseverance and innovation, the company found a niche and now works for 25 Bakken producers. Black said the company, which has three trucks and 10 employees, will be adding two or three workers in the spring.

“We’ve been able to grow our business with the entrepreneurial spirit that started with my grandfather,” he said. “We’ve shown that a North Dakota company can bring innovation to the Bakken, develop it and deliver it better than anyone else.”

Trey Wilson, CEO of MBI Energy Services, said the low-oil-price environment caused the Williston Basin company to drop from 2,000 employees to around 700. But he sees a positive change coming with increased activity in the Bakken.   

“We will be adding hundreds of jobs and our competitors will be doing the same thing,” he said. “Drilling activity is a huge driver for the need for oilfield services.”

Wilson said there are about 850 drilled but uncompleted wells in North Dakota. Last year, about 50 per month were completed, but this year, he believes that number will be closer to 85 per month.

The state is in a much better position to accommodate new workers than it was five or six years ago, Wilson said. The lack of infrastructure created difficult conditions for those who moved to North Dakota and for the companies doing business there, but times have changed.

“I’m tremendously impressed with the growth of infrastructure; this is a wonderful place to live and work,” Wilson said. “We have to do a better job of telling the rest of the country what’s going on here, why it’s a good place to work and raise a family. North Dakota has a lot to offer.”