May’s oil numbers and Prairie Dog Delays
BISMARCK, N.D. (KFYR) - “The second quarter of 2020 was a five alarm fire for North Dakota’s oil and gas industry,” said Mineral Resources Director Lynn Helms.
It seems as though it's one thing after another for North Dakota's oil and gas industry, first it was the pandemic, followed by the supply glut and price crash, and then the Dakota Access Pipeline ruling and these hits are all starting to take their toll.
North Dakota's Oil production fell below a million barrels per day in May of this year, the lowest it's been since June of 2013.
April to May even set a record as the largest one month drop in oil production numbers with a thirty percent freefall.
“Every operator was shutting in everything so we just saw a tremendous decline,” said Helms.
Operators are drilling wells, but leaving them incomplete until the market improves. In May the state had an inventory of 6,000 incomplete wells, three times what the industry saw in April. The number of drilling rigs continues to decline, however, to 11 active.
“In Seven months time we’ve seen 82% of the drilling rigs idled that were operating in the state of North Dakota,” said Helms.
In May, oil and gas producers were still seeing the effects of OPEC producing huge amounts of crude, with little demand as the world shutdown because of coronavirus. “The COVID-19 pandemic destroyed 30% of world demand for liquid petroleum products,” said Helms.
Helms expects to see production stay down. An ongoing court battle over whether the Dakota Access Pipeline can operate, could affect crude prices at market. He expects recovery to take more than a year.
Helms says the oil downturn is delaying funding for the state water commission, K-12 education, and Operation Prairie Dog funding forcing city governments to find other ways to fund infrastructure projects.
Mandan city leaders, for example, promised funding to some city street projects, and now have to pull money from other areas. Helms thinks the legislature will adjust how that oil and gas tax revenue is used in the future.
“We’re going to re-prioritize those buckets and change where oil revenues flow to, and how they sit waiting for the next legislature to spend them,” said Helms.
Cities across the state expected an initial payout already and more to come later this year.
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