Coronavirus pandemic impacting oil prices

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The price war between Saudi Arabia and Russia on top of the coronavirus pandemic have dealt a crushing blow to the oil industry; one the president and top oil leaders are trying to figure out how to recover from.

With low demand and even lower prices, North Dakota producers have already shut in about 3,600 wells.

North Dakota's production is down about 15% to 16% since March, or 175,000 barrels/day shut in.

Low demand means the oil we are producing has nowhere to go, so it's getting stockpiled, and storage is limited.

"As they see storage filling up, and they see differentials expanding, which they would over the next three months, they could idle another 2300-2500 wells, another 200,000 barrels a day; and if it went longer repeat that again another three months out," said Lynn Helms, Department of Mineral Resources director.

Helms says North Dakota oil companies are laying the groundwork to close up to 6,000 wells, or 600,000 barrels a day, in case that's necessary. He says that storage space could last anywhere between three to 10 months if the issues aren't resolved.

"The oil market is better than it was two days ago, but it really is in a crisis situation," said Helms.

He mentioned at least one producer sold oil at $4 a barrel recently.

Helms said, "Less than a tenth of what the revenue forecast is based on and less than a tenth of what royalty owners are used to getting before we went into this price crash."

Regulators were putting their hopes in a phone call Friday between the U.S., Saudi Arabia and Russia. Sen. Kevin Cramer was at the conference to speak for our oil industry.

"In North Dakota, since Saudi Arabia and Russia announced their little price war, we've had $6 billion worth of cutbacks taken out of our state plan for this year. I was economic director when the entire gross domestic product of North Dakota was thirteen billion dollars. That's significant, that represents not just cutbacks, that represents lots of jobs," said Cramer.

After the conference Cramer said: "American independent oil producers cracked the code to this energy renaissance, but Saudi Arabia and Russia want to put them out of business by exploiting a global pandemic. Instead of playing into their hand, companies should stand up for American workers and our interests."

Cramer continues that the U.S. should consider removing troops from Saudi Arabia, saying we shouldn't be protecting their oil assets while they're undercutting ours.