Crude oil prices collapsed on April 20 by more than 114% in a span of mere hours as the coronavirus pandemic continued its razing of the energy economy. As demands rose and logistical chains collapsed, rising stockpiles of crude overwhelmed storage facilities across the nation, resulting in prices plunging crude oil into negative digits for the first time in history.
In response, the Department of Mineral Resources announced on Wednesday the establishment of the Bakken Restart Task Force, an entity whose function has been defined as facilitating rapid recovery of the oil and gas industry and supporting sectors impacted by coronavirus-related demand shock.
The task force will comprise members of the Mineral Resources, Public Service Commission, Environmental Quality, Trust Lands, Pipeline Authority, Office of Management and Budget, Tax Department, Commerce, Bank of North Dakota and input requested from various industry subject matter experts.
Dickinson Mayor Scott Decker said he was pleased to hear that the state was making concerted efforts to address the energy crisis by way of a task force, saying that he would be interested in seeing local stakeholders and city leaders across the Bakken actively participate in formulating long-term solutions to the problem with the Task Force — though confirmed that no offer has been extended to date.
“One of the key issues in the west before COVID and the collapse of the oil prices started was that we were having issues recruiting and retaining,” Decker said. “That’s a whole problem unto itself as schools, adequate housing, child care and mental health are all involved in that. When this discussion starts, all these factors have to be considered and not just focusing on bailing out companies. It’s all the other factors that need to be put into that equation.”
Decker added, “If we’re going to do a restart, let’s do it right.”
The Director of Mineral Resources, Lynn Helms, addressed the economic importance of having the energy sector rebound pointing to the fact that nearly 60% of all revenue collected by the state comes through the industry.
“At this time, North Dakota has 6,800 wells shut-in – amounting to 450,000 barrels per day of production. There are still 27 rigs operating and 5 frac crews running. These are staggering numbers impacting North Dakota production.” Helms said. “However, it was clear during the first meeting of the Bakken Restart Task Force that many great efforts are already underway across agencies to secure, strengthen and stimulate North Dakota’s energy future.”
In a bid to right the ship, The Bakken Restart Task Force announced Wednesday that it would focus on two core areas they believe will quickly recover North Dakota’s oil economy — regulatory relief and economic stimulus.
Regulatory relief will focus on piecing together various regulatory agencies into a single entity in an effort to identify and streamline regulatory requirements while clarifying and communicating existing relief efforts. These efforts would include: grace periods on bond increases for commercial disposal wells and abandoned wells; inactive and non-completed well waivers reinstated; suspension of drilling well waivers reinstated; reduced meter proving requirements to quarterly; and remote hearings being made available. Additionally, other considerations would include: winter blend gasoline waivers; tank integrity testing flexibility; ground water and air quality sampling flexibility and alternative compliance for social distancing and travel restrictions issued.
The second core area of economic stimulus will levy the state’s existing programs and funding sources to invest in projects with long-term benefit to the state. These would include: abandoned well plugging, environmental remediation, research pilot projects, and more in an effort to quickly return the service industry to pre-collapse health.
According to the Department of Mineral Resources, $155 to $310 million in funding would be needed for operators to bring those wells back to production and grant incentives would need to be spent by Dec. 30, 2020 to qualify for CARES Act funding.
For trucking companies on the Western Edge, the collapse in oil prices has left the transportation industry reeling as the production of oil grounded to a near halt., leaving some to question whether the efforts to rebound the industry should consider the tangential industries that are directly impacted.
“Economically, there’s nothing in the oil industry so we’ve been all agricultural to continue business,” Kris Johnson, president and owner of All In Trucking Inc., in Williston, N.D., said. “We’ve been transporting fertilizer and last year’s crops for farmers to be able to buy the fertilizer and put this year’s crop in … we actually got back into (grain) hoppers back in 2014 when the oil crashed and I guess we doubled down on that, too.”
Johnson added, ““We just have to look outside the box on this restart.”
As North Dakota’s oil and gas industry contributes more than 72,000 jobs and was foretasted to generate $4.9 billion revenue to the state from July 1, 2020 through June 30, 2021, getting the industry up and running is a matter of significant importance for the state.
The Bakken Restart Task Force will continue to meet weekly to discuss focus areas and will maintain a list of actions taken designed to provide resources and updates to those Bakken businesses seeking information on relief available.
The Dickinson Press will report the results of the Bakken Restart Task Force Action Report every Tuesday.