Four of the main oil producing counties in North Dakota received detailed projections of the potential impacts from the Bakken oil boom, with Dunn County rounding out that list.
By BRYCE MARTIN
Posted Feb. 22, 2013
Richard Gartner, of the Center for Rural Entrepreneurship, led a discussion Tuesday to explain the number-heavy projections contained within Vision West’s Shale Projection Webinar Series, primarily focusing on Dunn County.
“(It will) provide information that should start a community conversation at the local level,” Gartner said of the report.
Lynn Helms, director of the North Dakota Department of Natural Resources, developed models of Bakken development that are consistent with the geology and what is known of the oil content of the formation and uses current industry standards of employment per rig and well.
Social scientists Dean Bangsun and Nancy Hodur with North Dakota State University estimated the regional impacts of the development of the Bakken in terms of employment, housing and population projections. They then distributed those regional impacts among the counties as best they could using historical relationships and trends that they were able to identify in the data.
With use of new technology, including hydraulic fracturing, the range of oil production in the county area has vastly expanded. Over 40,000 new Bakken wells are projected for addition in the future – 2,000 a year for the next 18 years.
Intense drilling is expected to continue in Dunn County with 31 rigs in the county through 2016 and 26 rigs until 2035.
“That is a long and sustained and intense level of drilling that is projected for Dunn County,” Gartner said.
Last week, Helms estimated there were 182 rigs in North Dakota, a number that dropped from over 200 last fall. Oil companies expended their calendar year oil budget and pulled back until a new year’s budget was in place.
Inside the report, Helms detailed three scenarios of possible routes for future oil production.
“I’m trying hard not to call them predications … trying to describe most likely scenario, most probably pathway,” Gartner said. “These are like pathways into the future.”
The more optimistic scenario laid out by Helms included fairly strong prices for oil. Under that scenario, 1.25 million barrels of oil would be produced per day, lasting for a decade.
Along with his scenarios, Helms detailed three “wildcards” that could adversely affect said scenarios: New regulations on hydraulic fracturing would lengthen the time it takes to get federal drilling permits. Expectation is for one or more regulations to be producing rules by spring, which would ultimately slow down the pace of drilling and push it forward into time to make the Bakken last longer. A repeal of current tax incentives given to the oil industry would lower the amount of drilling capital dedicated to drilling Bakken wells. And the slow down of the Chinese economy could lead to a downward price spiral of oil. As the price of oil drops, each oil company would reach a price point where it becomes uneconomical to drill at their location. As a result, declines in production would be seen in outer rims of oil producing counties.
Contact Bryce Martin at firstname.lastname@example.org.