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NDPC year in review – key takeaways

This week the North Dakota Petroleum Council (NDPC) held its annual meeting in Fargo providing an overview of the state of the Bakken to its growing membership. Topics ranged from a review of the past year’s activity to the most recent legislative session, current technological trends and of course, what’s in store for the future.

Although times are tough at the moment, the Bakken is still poised for continued and sustained growth as the overwhelming boom recedes into its current, more manageable state. Jobs are still available, and communities are continuing to expand, state regulators reported. The fact remains, however, that activity is shifting away from the frantic development stages to the harvest stage.

The mood of the annual meeting was largely positive. The council itself continues to grow and expand its reach across the state. This year’s meeting being hosted in Fargo was a testament to how expansive the impact of the Bakken has been, and continues to be, as it becomes a permanent fixture of life in North Dakota. Here are some of the key takeaways from this year’s meeting. But, if nothing else, rest assured that everything will be okay — the Bakken is here to stay.

State of the Bakken

Oil and gas producers continue to weather the current climate of the market, dealing with the perpetual oil price decline, cost cuts and layoffs. North Dakota industry regulators continue to stress that this is not a bust. North Dakota oil production continues at a steady pace of roughly 1.2 million barrels of oil per day with over 12,000 wells producing and 914 wells waiting completion.

North Dakota has a long way to go, however. Infrastructure such as pipelines continues to develop, and wells are stilled being drilled. This week 60 of the 68 active drilling rigs were located in the core of the Bakken, slowly adding to the tally and working up to the 57,000 total wells that are expected to be drilled in the life of the play. The slowdown has been an opportunity for oil-impacted communities to press on with infrastructure developments, working to create communities that will become the future home of a permanent workforce.

Legislative review

The past legislative session took some strides forward, especially for oil impacted communities with the passing of the $1.1 billion surge funding bill. With the slowdown communities are finally catching a breather as they begin construction projects that are building up the much needed infrastructure that has been overwhelmed since the boom began.

Additionally, the downturn prompted the restructuring of the current oil and gas tax structure which will provide a steadier and more predictable tax system over time. Also coming out of the latest legislative session are various pipeline programs aimed at improving land reclamation and system monitoring. Additionally, the state has approved increased limits on oilfield waste rules and is exploring the possibility of recycling drill cuttings.

Feds vs. state

Federal oil and gas regulations keep piling up from the Bureau of Land Management and U.S. Environmental Protection Agency, and other unrelated measures in which energy executives and state regulators have deemed too restrictive. The BLM wants oversight on hydraulic fracturing operations on federal and tribal lands, while the EPA is seeking control of waterways in what many are calling a severe overreach.

North Dakota Attorney General Wayne Stenehjem testified to the multiple lawsuits opposing the new regulations, adding that they would be pursued “with zeal.” Along with numerous other states, North Dakota is in the midst of pursuing lawsuits attempting to reverse the new rules, or prevent them from going into effect. The BLM rule has temporarily been halted, and a federal injunction has been put on the new water rule for the 13 states participating in the lawsuit.

Tech trends

The University of North Dakota’s EERC has been busy testing new methods of enhanced oil recovery, with lab testing that shows promise for utilizing carbon dioxide to increase recovery methods. While promising in the labs, showing up to 90 percent recovery rates, tests in the field have yet to show the same promise.

While the EERC continues on with its research, oil and gas companies are continuing to experiment with different methods of improving production rates, such as using more sand in the fracking process. One recurring theme, though, are crews working toward tighter well spacing and the use of more frack stages.

Pipelines and crude-by-rail

The University of North Dakota’s EERC has begun to study gathering pipelines and the impact they are having on the state. Prompted by a house bill in the most recent legislative session, the project in focused on conducting analysis of crude and produced water gathering pipelines. The report will examine the best practices and will provide recommendations upon completion. With numerous new pipelines permitted and in the construction process, the hiring of additional inspectors has also been authorized by the state.

Until these new pipelines come online, however, crude-by-rail shipments will continue to fill in the delivery gaps. The West Coast, one of the main markets receiving Bakken crude, will continue to transport the product by rail well into the foreseeable future. Additionally, preliminary research conducted by federal agencies has shown that Bakken crude shipped from North Dakota has been unfairly singled out in safety discussions, and have said the vapor pressure of Bakken crude in “not outside the norm” for light crude oils.

Education

Chancellor of the North Dakota University System Mark Hagerott presented about the need to retain oil and gas workers within the state and the opportunities presented by current downturn. He said that many workers are not currently pursuing any further education, something which the Bakken U is hoping to change. The program is tailored to help oilfield workers earn a degree or certificate from one of five colleges and universities in western ND with energy-related and high-tech degree programs. Recruitment has already begun, and programs range from one- or two-year certificates to graduate degrees.

One comment

  1. It reads like the annual meeting of Optimist’s International….

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