Department of Minerals projects increase in oil price
Lynn Helms, director of the North Dakota Department of Mineral Resources, forecasts black gold on the horizon.
"Crude oil inventories in North Dakota are dropping very rapidly and by the first quarter of next year they should be back to average numbers," Helms said, addressing a group of lawmakers, lobbyists, industry leaders and school officials at the Western Dakota Energy Association's annual meeting in Dickinson on Thursday. "That's the time frame where we start to see the $55 to $60 (per barrel) oil, by the first quarter of next year."
Helms offered an optimistic update on North Dakota's energy landscape, and provided oil production numbers on a county-by-county basis.
He estimated that the oil and gas industry has contributed $125 billion to the state's economy over the past 10 years.
"To put that into context for you, that's $8.1 million for every man, woman and child in the state of North Dakota," Helms said.
After a bit of a lull in Bakken oil activity, he said there appears to be some indication that production will return—provided the market cooperates.
"All the Organization of the Petroleum Exporting Countries (OPEC) nations, including Iran and Russia, want to extend their production cuts," Helms said. "They've been very disciplined with production cuts, they want to extend them through mid-2018. If that happens, I think we'll see oil markets respond in a very positive way."
OPEC has been cutting oil production in an effort to bring the price of oil back to $50 a barrel after it had dropped well below that, Helms said. The nuclear treaty signed by the U.S. with Iran has now seen 4 million barrels of oil added to the global marketplace per day, and adjusting to deal with that influx is another reason why OPEC may continue reducing its oil production, he said.
Helms reported that oil production in North Dakota is higher than projected and could be up 11 percent from what was expected by the close of the biennium. There are 31,545 total wells in North Dakota, which breaks down to 14,080 active producing wells, 1,498 inactive wells, 863 wells awaiting completion, 1,950 wells permitted and 13,154 not drilled. Oilfield jobs are projected to remain strong heading into the future and Helms said enhanced oil recovery could even better maximize the profit potential of Bakken oil.
"This is a five-generation oil play," he said. "This has changed the state of North Dakota for generations. Our grandchildren's grandchildren will be affected by this. We want to take a very long view on how we approach this thing."
Helms reported some ups and downs in individual counties:
For Billings County, the number of production jobs is "expected to grow," he said. Bowman County is "waiting for CO2" due to a hang-up on a planned CO2 pipeway that's been delayed due to Bureau of Land Management regulations regarding sage grouse, a protected bird native to the western U.S.
Dunn County is also seeing a ray of sunshine after some gloomy predictions a year ago.
"Bear Creek is better than anyone dreamed," Helms said. "It opened the gates for people to trap and drill wells and capture the gas."
Helms said Dunn could run into some trouble by early 2020 when it comes to gas capture, but between then and now "it looks very positive."
Stark County is "back on a growth profile," he said. On the whole, the region continues to provide promise for profit and prosperity in the energy sector.
"If you look at it strictly on a productivity level ... the Bakken area ranks right up there," Helms said. "The Bakken is fantastic."
Helms said his staff is studying other potential source rock beds in the state, saying that there were 14 others (in addition to the two in the Bakken and one in Spearfish) that need to be promoted.
"We anticipate the United States Geological Survey is coming back in 2020. We want all of the data to put in front of them," Helms said. "We have 17 unconventional resources. Not one, not two—17."
UPDATE: An earlier version of this article contained an error. The number of producing wells in North Dakota was incorrect. There are 14,080 active producing wells, 1,498 inactive wells, 863 wells awaiting completion, 1,950 wells permitted and 13,154 not drilled.