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As prices stay low, life transitions to a new normal in North Dakota oil country

BISMARCK -- Judging by key numbers, North Dakota's Oil Patch had mostly a down year in 2015 compared to the year before.On the bright side, the state's population continues to expand and grow younger, births are increasing and the median wage is ...

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BISMARCK - Judging by key numbers, North Dakota’s Oil Patch had mostly a down year in 2015 compared to the year before.
On the bright side, the state’s population continues to expand and grow younger, births are increasing and the median wage is creeping up, indicating that the Oil Patch, while an important economic crucible, isn’t the only engine pulling the train.
Starting with the price of oil, the number of rigs drilling and expanding that view to encompass job openings, jobs filled, sales tax revenue, royalty payments, industrial water sales and the number of new wells completed, the year ending shows a significant slide toward what may be the new normal in the 15,000 square miles that make up the Oil Patch, at least for the foreseeable future.
No turnaround foreseen
Department of Mineral Resources director Lynn Helms says too many global factors are at play to predict when a turnaround could occur and that, at least in terms of rigs drilling, it’ll get worse before it gets better.
“Oil price weakness is anticipated to last through next year, and that’s the main reason for the continued slowdown,” said Helms, adding that the rig count, now at 65, is at a six-year low and could drop by another 10.
There are some bright spots remaining in the Oil Patch economy and one of those is wages, says Job Service Williston director Cindy Sanford. Wages are still high - Walmart’s offering $17 an hour - and professional jobs worth $150,000 and more are still posted, she said.
What’s missing in the new economy are the oil and gas jobs for unskilled workers.
“Now it’s about a skill set, math, science, engineering,” she said.
McKenzie and Williams counties continue to offer the highest average weekly wages of $1,450, up .2 percent from last year, compared to a statewide average of $938 a week.
Got jobs
Another bright spot is that more people are employed in Williams County this year than last - 33,000 compared to just over 30,000 - though 3,000 fewer jobs are in the oil and gas industry, including trucking, Sanford said. Statewide, the number of job openings posted through Job Service is down 21 percent this year compared to last. Sanford said that indicates the job market isn’t as hot as it was and also some positions have been filled as the oil industry jobs shrunk in number.
Comparing second quarter, the latest available, Job Service says the total number of employed statewide decreased by just .7 percent from 445,700 jobs in the second quarter 2014.
“That growth rate of 8 percent to 12 percent a year, we could not continue at that rate; a rate of 3 percent is more healthy,” Sanford said.
Demographic shift
There was good news on North Dakota’s census this week, with population numbers continuing to increase. The Census Bureau estimates the state’s population at 757,000, up 17 percent since 2004, when out-migration started reversing.
“North Dakota’s economy continues to drive a dramatic shift in our demographics,” with a population that’s not only larger, but younger than ever, said Gov. Jack Dalrymple. The median age of 35 is two years younger than it was a decade ago, the census data shows.
McKenzie County Electric Cooperative says it’s still humming along, with an increase in megawatt demand compared to last year, mostly driven by the gas side of oil development as electric-driven gas compressors are put into play, says general manager John Skrurpy.
“We’re still trying to catch up with the gas plants coming on,” he said.
Megawatt sales are up 20 percent this year compared to last and more than 700 percent since 2000, he said.
Stats line up

  • As for personal income, the state Tax Department estimates that, based on the gross value of oil taxes, monthly royalty payments to North Dakota residents with oil and gas minerals likely dropped by nearly $59 million this November compared to last. The in-state mineral owners’ share went from $128 million in November 2014 to $69 million this November, a drop of 47 percent, according to the department.
  • The latest sales and use taxes for Williams County, a hotbed of oil-related activity, declined by 35 percent to $752 million for this year’s second quarter from $1.1 billion for the same quarter in 2014. Statewide, the decrease in sales and use tax for the quarter was 14 percent, according to the Tax Department.
  • The number of rigs drilling today is 65, compared 174 a year ago, a drop of 63 percent.
  • New wells brought on line dropped by 35 percent over the year. The number of wells drilled, but not fracked, increased by 50 percent compared to last year.
  • Sales of water remained fairly steady, despite fewer wells fracked for the year.

“Even though there’s a significant decline in the number of fracks taking place, there’s a significant increase in the water being used, so we’re not seeing a dramatic drop in water being used,” Mike Hove, senior water resource manager for the Office of the State Engineer, said. His numbers show a 45 percent increase in the amount of water used per frack. Wells fracked this July required an average of 16 acre feet of water, or 5.2 million gallons per well. That compares to an average of 11 acre feet of water, or 3.5 million gallons per well, for wells fracked the same month in 2014. An EOG Resources well, fracked in late 2014, sets the record for the most water used for a frack, at 59 acre feet, or 19 million gallons, Hove’s numbers show.

 

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