BISMARCK — North Dakota's oil output is expected to remain low through the winter and begin picking up again this spring, according to the state's top regulator, as the industry continues to keep a wary eye on President Joe Biden's new White House administration.
North Dakota's oil industry is in the process of prolonged recovery from the price collapse spurred by the coronavirus pandemic. Though Department of Mineral Resources Director Lynn Helms predicted steady improvement for the industry as markets recover later this year, aggressive actions by the Biden administration, targeting the oil industry and aimed at combating climate change, have left many in North Dakota on edge.
The state produced 1.2 million barrels of oil a day in December, according to data released this week, a decrease of about 35,000 barrels from the month before. North Dakota has been experiencing frigid temperatures that hinder work in the oil fields, Department of Mineral Resources Director Lynn Helms said Friday, Feb. 12, meaning January and February "will not be pretty months" for oil production.
He said production should begin to pick up again with the spring thaw.
Helms also addressed Biden's moratorium on new oil and gas drilling on federal lands. The president's decision has been heavily criticized by North Dakota officials, but Helms noted the state already saw significant relief thanks to an exemption granted on oil-producing tribal lands like the Fort Berthold Indian Reservation.
Although Biden's executive order could have the long-term impact of reducing North Dakota's total new oil wells by 14% — about $285 million in oil royalties to the state — the cut could have been almost twice as large without the Fort Berthold exemption, Helms said.
Looking to take further advantage of this exception on the reservation, Helms noted, his department worked with lawmakers on Senate Bill 2319, which would expand a tax-sharing agreement with the Mandan, Hidatsa and Arikara Nation to incentivize more oil drilling on the borders of the Fort Berthold Reservation.
Proponents of the bill, which drew the endorsement of the Senate Tax & Finance committee earlier this week, say increased horizontal drilling extended underneath the reservation would allow the state to collect tax revenue off of minerals that are less accessible under the Biden order.
State analysts said the bill would lead to an immediate cut of about $15.5 million in tax revenue for the state, but Helms projected that it would spur the drilling of some 75 new wells and bring in close to $250 million in taxes over the longer term.
"There's enormous upside," he said.
Biden's intentions for the Dakota Access Pipeline, which is operating without a key legal permit, are also front of mind for the oil industry. A federal judge earlier this week granted the new administration an extension on its decision for the pipeline, breathing room Helms said should allow the pipeline to operate uninterrupted at least until the new deadline on April 9.
Helms said the industry showed major strides in meeting the state's flaring goals in December. Flaring natural gas drives climate change, and the state has long tried to capture more of the gas to get closer to national standards. Starting last November, the state raised its goal to less than 10% flaring, a bar that was met in every region in December.
"Every single area of the state, finally, is in compliance," Helms said. "I think that's a landmark. I cannot recall the last time the entire state was in compliance."
Readers can reach Forum News Service reporter Adam Willis, a Report for America corps member, at email@example.com.