As the current slowdown of drilling operations in the Bakken persists and rigs are stacked, they have to go someplace, but where?
The Dickinson Press reports that as the rig count continues to fall, companies are in growing need of locations to store the unused drilling rigs. However, the rigs can’t stray too far from the oil patch in the event that prices start to climb and operations resume. In North Dakota, though, administrative code doesn’t usually allow rigs to be stacked on drilling sites. The code considers a stacked rig to be unused equipment and requires the rig to be moved or put back to use within a reasonable time limit.
Patterson-UTI Drilling, for example, has leased rural land in Stark County. The landowner was required to obtain a conditional use permit before storing rigs on the swath of land outside Dickinson. Like the rest of the most recent oil boom, small North Dakota communities are having to deal with problems that have never been an issue in the past. During a recent zoning hearing, County planner Steve Josephson said receiving requests for such permits is a first for him, and he suspects there will be similar requests in the near future. “This is a test for us,” he said.
Oil prices, which have decreased by roughly half since last summer, are causing the current slowdown in the Bakken formation. As of today, the rig count sits at 145, down by about 40 since last December. The downturn has shifted drilling operations to the core of the Bakken formation in Dunn, Williams, McKenzie and Mountrail counties where drilling is more economical. The rigs that are being stacked need a place to go, though, and can sometimes require an area of up to almost three quarters of an acre, or about two thirds of a football field.
As reported by The Dickinson Press, spokeswoman for the North Dakota Department of Mineral Resources Alison Ritter said it’s commonplace for surface land owners to lease or rent space to oilfield companies for the storage of stacked rigs. If the rigs aren’t put out to pasture, they are often shipped out of state, on to regions where drilling is still active or where there is more storage space. The conditional use permits obtained in order to store drilling rigs last a year. Extending the permitted amount of storage time would require another public hearing. Josephson commented that with a bit of luck, in a year’s time “the economy will have gotten better and the price of oil will have gone up.”
To read the original report by The Dickinson Press, click here.