Helms predicts a busy summer in the Bakken

lynn helms wbpc2014
Lynn Helms, director, North Dakota Department of Mineral Resources, at the Williston Basin Petroleum Council Conference in Bismarck, ND. Photo by Paul Flessland.

After a couple of slow or down years in the Bakken, Lynn Helms, director, North Dakota Department of Mineral Resources, sees this summer changing gears.

“So far it looks like 2017 is going to be a pretty busy year. Probably much busier than what it looked like back in January when prices were still lingering pretty low.”

However, Helms added a global caveat to his Bakken prediction.

“That all depends on what OPEC does at the end of May,” Helms said. “The production cuts they put in last November expire at the end of May.”

According to Helms, if the OPEC production cuts are not extended, oil prices could drop until the markets get into a supply and demand balance.

“But for right now, it is looking like a pretty busy year,” Helms said.

Looking back over the last couple of years, Helms said the Bakken was “stagnant”.

“We saw a fairly significant drop in rig counts, but we were holding production steady,” Helms said. “We were seeing a little bit of an increase in uncompleted wells inventory.”

Helms transitioned to 2016 and how foreign countries can impact the local Bakken shale play.

“In 2016 after the Iran nuclear deal, Iran was able to ramp up to full production,” Helms said. “We saw that second big hit in oil prices and things went into serious decline.”

Helms added that was when the Bakken fell below one-million-barrels-a-day, rig counts below 30, frac crews downsized from five to three workers.

“2016 was a very tough year for the oil industry,” Helms said.

Low oil prices, global influence and companies rightsizing their crews, yet still the Bakken was hovering below and above one-million-barrels-a-day, which is a remarkable feat when looked at from a 5,000-foot-view.

“We never got below 930,000-a-day,” Helms said. “A rig count less than 30 and noncompleted wells hitting over 900 wells really showed these unconventional plays have got their legs under them.

This changed how the oil companies approached the Bakken and it’s strategy for extracting its resources.

“It used to look like a treadmill and you had to drill drill drill and frac frac frac to maintain production,” Helms said. “That really wasn’t the case in 2015 and 2016.”

Industry pulled back into the core, found efficiencies and generally better ways to complete the wells, according to Helms.

“It really sustained production and activity surprising well,” Helms said.

Circling back to this summer’s anticipated production, employment and energy work is already picking up.  Helms believes

“We started the spring season with industry wanting to add ten drilling rigs and ten frac crews which requires over 2,000 new employees or returning employees,” Helms said.

According to Job Service of North Dakota, there are 1,400 jobs listing for western North Dakota in the oil and gas sector. In addition to the addition of employment, wages are expected to be higher than in previous years.

“Talking with Cindy Sanford with Job Service a few days ago, wages have really started to increase,” Helms said. “They are looking at $26-an-hour versus $18-an-hour in order to try and attract some of the truck drivers and frac crew people back.”

Getting people back to North Dakota and the Bakken is easier said than done.  Many of the people who were here during $100 oil may not be so quick to come back.  Many have moved on and found new jobs either in other shale plays or even with other companies like WalMart or other major companies in need of constant product distribution.

Helms sees the increase in wages and the recent push for quality employment as a tool for attracting the experienced workers back to the Bakken.

“We had the big boom from 2010 to 2012 and the rest of the country was in a recession so you could attract people relatively easy to western North Dakota,” Helms said. “You have to be competitive.”

Housing allowances are even offered in some cases too, according to Helms.

“They are not paying for housing, but there are apartments available and they are offering for some assistance getting into those and have increased the wages and are offering some overtime.”

In regards to the oil and gas communities, Helms is hearing some anecdotal information from local officials that growth is still happening.

“I keep hearing that school populations continue to grow,” Helms said. “Stanley, Williston, Tioga, Watford City, Dickinson, all of them are continuing to see school populations grow.”

Helms said this cultivation of growth was something anticipated by energy officials and others following the oil and gas data.

“That trend we predicted where families were going to want to live in North Dakota and do the production type jobs,” Helms said. “Those job numbers grew at a slower pace, but did continue to grow even during the slow down.”

Those who stuck around after the downturn arrived and low oil prices kicked in, are the ones who are prime for using the new housing, schools and recreational opportunities.

“These families are going to drive the secondary economy of North Dakota where all those secondary jobs in food service and other services are going to occur,” Helms said.

 

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