KLJ hired by state to study oil, gas industry
During a hearing before the Energy Development and Transmission Committee on Oct. 31 at the state Capitol, the firm was chosen over a New York City-based firm called The Louis Berger Group to complete the study, which will focus on oil and gas industry production, practices and other impacts to the state from the Bakken shale play.
The state will pay KLJ about $125,000 for the study, which is expected to be completed in August, said KLJ’s manager for the project, Mike Wamboldt.
“What they were looking for was assistance in studying the likely changes to oil industry practices, production impacts and tax policy for the foreseeable future in North Dakota,” said Wamboldt. “If you put it in layman’s terms, the committee is really just looking for what we can expect in the future pertaining to oil and gas development so they have a basis to make decisions on down the road.”
Initial work on the study will focus on a baseline period of five years, from 2014 through 2019, said Wamboldt. With ever-changing technologies — such as the sometimes-controversial hydraulic fracturing, along with horizontal drilling techniques and other advances — greatly influencing the way business is conducted in major oil fields like the Bakken, several years can make a lot of difference.
“We’re going to look at a lot of areas,” Wamboldt said. “We’re talking about practices, infrastructure development, technology and enhanced oil recovery. We’ll also look at environmental policy considerations to get a better understanding of what may occur down the road in that regard. Anything that would affect practices and production will be looked at.”
Sen. Connie Triplett, D-Grand Forks, a committee member, supported the Berger Group proposal, saying that they were two different ideas.
“After we had a chance to hear both (proposals), my suggestion was that we rewrite both proposals,” Triplett said. “I thought the two should work together because KLJ’s proposal was much more focused on gathering information about what’s going on in the oil industry with an idea toward a forecast that would look out about five years. The other one was more focused on building a model that was adaptable to future changes in parameters and basically offering a training program for our state agency people.”
Triplett said North Dakota decision-makers can sometimes be “provincial” in their vetting practices, which can at times work against the best interests of the state.
“The proposals seemed, to me, to be very different responses to our request,” Triplett said. “They are both good and useful, but the out of state company seemed to have a clear edge in its adaptable modeling capabilities. I think we are kind of isolated here in North Dakota and I think there’s a lot to be learned from what’s going on in the rest of the world, especially when you’re talking about oil, which is a world commodity. We need to be aware of the dynamics occurring in other places that might affect us in the long term.”
Wamboldt said enhanced methods of frack water recycling and hazardous spill reporting and management will also be touched on. Wamboldt added that additional studies could be requested by lawmakers beyond last week’s baseline agreement, which would cost the state more money.
Triplett said the committee will likely meeting with KLJ representatives soon to discuss specific parameters for the study. Wamboldt said work could be begin in December.