North Dakota Revenues Drop $41.7 million

September 29, 2015 Elizabeth Alford

Bakken Rigs and Productivity — North Dakota Revenues Fall

North Dakota revenues have taken a deep dive this year but the state still ranks as a fiscal model.

Low oil prices and fewer drilling rigs are being blamed for a drop in North Dakota's general revenues that fell to $41.7 million during July and August. But with prudent spending by lawmakers and a continued surplus, this is not devastating news. Rather, House Majority Leader Al Carlson framed it as a “real wake-up call."

This week, the Chicago-based think tank, Truth in Accounting, named North Dakota the nation’s second-best fiscal health in 2014. The agency reports that the taxpayer surplus has more than tripled since 2009, from $8,300 to $28,400 per taxpayer.

“State Office of Management and Budget Director Pam Sharp commented, “We have a really strong amount of reserves that are available, and the budget that we have for 2015-17, we really took into account that we were going to have less money.”

At the beginning of 2015, North Dakota lawmakers basically started over by pulling apart Gov. Jack Dalrymple’s proposed budget. They were forced to make some difficult decisions regarding spending cuts, while finding the money to fund important projects.

Signs of concern for the state:

North Dakota's “hidden debt” of more than $300 million in pension liability and $43 million in retiree health care liability
Job Service North Dakota reports seeing a 40% increase in unemployment insurance claims sicne this time last year
The state currently has 70 active rigs as of Thursday, down from 193 just a year ago.

EIA: Bakken Production Declines

September 22, 2015 Elizabeth Alford

Production in the Bakken Shale play decreased over the summer according to the Energy Information Administration' s latest Drilling Productivity Report.

Related: Bakken Rig Count Falls to 70

Since April, oil production in the major shale plays has decreased sharply, with total production falling by 350,000 barrels and the EIA expects that this trend will continue and for production to decline for most of the key US shales by October.

On September 14th, the EIA reported that the Bakken Shale produced 1.22 MMbpd (million barrels per day) of crude oil in August, 1.40% less than the month before but 5.10% more that a year ago. The Bakken will likely see a fall and is expected to produce 1.18 MMbpd (million barrels per day) of crude oil in October.

And the bad news gets worse. Recent data from FactSet suggests that producers in the shale industry have lost over $32 billion since January 1st and are quickly approaching the deficit of $37.7 billion reported for the whole of 2014.

Related: Shale Industry Loses Billions

The Bakken rig count has vacillated between 68-70 since July as producers remain skiddish due t low oil prices. This is a drop of over 50% from last year when the rig count was at 189 drilling rigs in the region.

Continental Sidelines Bakken Rigs

September 15, 2015 Elizabeth Alford

EOG Releases 2015 Q1 Report — Continental Resources Announces More Reductions

Continental Resources continues to showcase their flexibility, announcing this week it will be sidelining rigs in the Bakken while reducing its CAPEX once again.

Three week after reporting the "excellent results' of their second quarter, Continental Resources, Inc. says it now plans to spend approximately $300 to $350 million less than its previously approved capital budget for 2015 in order to deal with the current crude pricing environment. This adjusted spending will be $2.35 billion to $2.40 billion.

“Harold Hamm, Chairman and Chief Executive Officer commented, “While we do not believe today’s low commodity prices are sustainable long term, we are committed to living within cash flow until they recover. We are reducing capital expenditures to protect our balance sheet and to preserve the value of our world-class assets until commodity prices improve.”

Continental will also join other producers who are sidelining their rigs in the Bakken. The company will reduce its operated rig count in the Bakken from 10 to eight rigs by the end of the month. The Bakken-Three Forks rig count dropped to 69 rigs running across our coverage area by end of the week last Friday.

The company continues to expect production growth of 19% to 23% for the year, compared with 2014, but now expects to exit the year with production in a range of approximately 200,000 to 215,000 barrels of oil equivalent (Boe) per day.

Heitkamp Reacts to Methane Ruling

September 8, 2015 Elizabeth Alford

North Dakota senator, Heidi Heitkamp, pushes back against the latest federal mandate to reduce methane emissions.

President Obama revealed a plan last month that would require oil and gas companies to cut methane pollution from drilling sites, distribution systems and in other areas of operation. This ruling is part of the President’s broad and aggressive plan to fight climate change, and many believe it would literally transform the energy industry.

The EPA said the proposed standards will reduce 340,000 to 400,000 short tons of methane in 2025, the equivalent of reducing 7.7 to 9 million metric tons of CO2. The agency estimates the rule will yield net climate benefits of $120-150 million in 2025.

Senator Henkamp is proposing bipartisan, “commonsense solutions” to reduce methane emissions including speeding up the permit approval process for gas-gathering lines and pipeline projects to reduce flaring.

“Heitkamp commented, “Energy production and clean air through reduced greenhouse gas emissions are not competing ideals, and efforts to reduce emissions don’t have to hurt our energy industry.”

Critics charged the administration with wanting to sabotage the industry and the jobs it has created. Oil and gas producers are already fatigued from months of low crude prices and adding potentially costly regulations at this time could have a dire impact on the jobs that depend on it. The EPA estimates that the ruling might cost the industry as much as $420 million.

Methane is the key component of natural gas and has a high impact on global warming — up to 25 times that of carbon dioxide. In April, a nationwide study showed that methane emissions across the United States had dropped significantly in the past two decades and are much lower than current Environmental Protection Agency estimates. Read more

Former Bakken Operator Pleads Not-Guilty

September 1, 2015 Elizabeth Alford

A Southlake, Texas man charged with illegally injecting saltwater into a disposal well in North Dakota pled not guilty to federal charges last week in federal court.

Jason Halek, a former operator of a saltwater well in southwest North Dakota, was indicted on 13 federal counts and fined a record $1.5 million in 2013 for putting drinking water at risk by illegally dumping more than 800,000 gallons of salty, oilfield wastewater into a former oil well in Stark County. He entered not guilty pleas to all charges including violating the Safe Drinking Water Act, making false statements and obstructing grand jury proceedings.

“The indictment claims Halik conspired to hinder by “craft, trickery, deceit, and dishonest means the lawful and legitimate functions of the EPA, in enforcing federal laws relating to the requirements of the North Dakota underground injection control program.”

Saltwater is considered an environmental hazard that can easily kill vegetation. Companies commonly dispose of the oil production byproducts by injecting them into an approved underground facility.

The EPA has been working for years to analyze the available scientific data to determine whether fracturing for oil and gas changes the quality or quantity of drinking water resources. New findings, released June 6th, reveal there are certain fracking activities that have the potential to impact drinking water resources including,

Water withdrawals in times of, or in areas with, low water availability
Spills of hydraulic fracturing fluids and produced water
Fracturing directly into underground drinking water resources
Below ground migration of liquids and gases
Inadequate treatment and discharge of wastewater