North Dakota Gov. Jack Dalrymple told industry and government officials on May 25 that the state’s unprecedented oil boom that made it the economic darling of the nation is far from going bust.
“From our perspective, we think that this industry in North Dakota is as solid as solid can be,” the Republican governor told an audience of several hundred at the Williston Basin Petroleum Conference and Expo in Bismarck. “We couldn’t be more optimistic of what is ahead of us.”
If not yet a bust, oil has been in a full-fledged slump for nearly two years in North Dakota, which has risen from the ninth-leading oil producing state in the nation to the No. 2 producer in the past decade as a result of advanced horizontal drilling techniques in the rich Bakken shale and Three Forks formations in the western part of the state.
With the price of North Dakota sweet crude nudging $50 a barrel Wednesday, the oil price is near double that of just a few months ago and sparked some hope among the governor and other expo-goers. But it’s still a contrast to when the expo was last held in Bismarck two years ago and oil prices were $100 a barrel. And only 28 rigs drilled for oil Wednesday compared to 83 a year ago.
Still, Dalrymple said, “We see recovery coming.”
State Mineral Resources Director Lynn Helms likened North Dakota’s oil future to a stock car race that has just begun.
“We’re on lap 100 of a 500-lap race,” Helms said.
About 11,000 Bakken wells have been drilled in the past decade, and another 31,000 are planned or permitted. Ultimately, about 65,000 wells are likely to come on line within the next 20 years, Helms said.
Denver-based Whiting Petroleum Corp., the largest producer in North Dakota’s oil patch at some 125,000 barrels daily, is still a “big believer in the Bakken,” company chairman and CEO James Volker said.
Volker said the company spends about $7 million to drill a well in North Dakota with an expected return of $27 million over the life of the well. When oil fetches $60 a barrel, the company can pay off a well in a year, Volker said.
North Dakota oil activity will begin recovering gradually if oil hits $60 a barrel. If prices rise above that, the Bakken will be “cruising,” he said.
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