Here’s a few quick notes on interesting news that I won’t cover in a separate post. I’ll come back to the first article later this week.
3/15 – Bismarck Tribune – Oil adds $43 billion to economy, study say – Research by North Dakota State University profs calculate that oil and gas add $43B to the state’s economy. In 2013, they calculated the energy industry added 55,000 direct jobs and another 26,000 indirectly. Report is available here.
While that was at the peak of drilling, when there were around 200 drills running. Currently there are around 112 rigs drilling. On the other hand, I calculate there was an average of 5,955 producing wells in the Bakken-only region during 2013. In January 2015, there were 9,085. The rule of thumb I’ve read is that each producing well creates about one FTE position. That means there are 3,130 more jobs now to support producing wells than in 2013. I don’t know if a drop of employment from 100 rigs getting stacked is more or less than 3,100. My guess is the net effect is a drop from 2013, but I’m not sure.
I’ll have more to say on this study later in the week.
As a smart-aleck aside, the leadership in California wants to make sure we don’t have any of that drilling stuff going on here. We don’t want any of those icky jobs or the resulting personal state income taxes or extraction taxes in this state.
3/16 – Forum News Service in Dickinson Press – Medical marijuana study dies in House – North Dakota will not join the list of states I’m watching to see how the regulation of marijuana affects a new industry. By a vote of 32-61, the House voted to not begin a study of allowing so-call medical marijuana. The next step after receiving the study would be to consider legalization. Thus the state halted consideration of medical pot at the first step on the journey .
3/16 – Bismarck Tribune – Oil storage may hit critical in two months – Article cites Lynn Helms, director of Department of Mineral Resources as saying the oil field layoffs may continue but the worst is behind us. Mr. Helms says 115 wells are needed per month to maintain production levels. On the day of the press conference (?) he said there are 112 operating and he has been told another dozen likely to be stacked.
Best one sentence explanation of the increased number of wells waiting to be fracked. The article says he said:
…that operators are postponing well completions to avoid giving up their high initial production when profits are low
News for me in the article is that state regs require a well be completed within one year of when the drilling was finished. That means those completed wells can’t be banked more than one year. There will be 125 incomplete wells that must start producing by June he said, because of the one-year limit.
3/16 – The American Interest (Jaime) – Irrepressible US Shale Defies OPEC – OPEC is trying to undercut US crude production, specifically the shale sector. They, along with other analysts, are only expecting US production to drop slightly by the end of 2015. While drilling is slowing quickly, output is flat or increasing. Not quite what they had in mind. The low prices are putting severe pressure on OPEC members that don’t have a humongous sovereign wealth fund to cover their budget shortfalls.
Costs are coming down for U.S. drillers, productivity is going up, the slowdown allows time to reorganize procedures, and drillers are implementing new technology.
Another thought about those roughnecks who were working in the Bakken, got laid off, and went home. They can get back to Bakken as soon as the drilling picks up.
Keep the following comment in mind every time you read of OPEC trying to crash the US oil industry:
We’ve said it before, but it bears repeating: bet against American innovation at your own peril.