October 26, 2011

Experts say 5,000 new wells needed to secure leases

By Kate Ruggles
Farmer Staff Writer

McKenzie County residents presently find themselves in a unique situation. Unique in the sense that nothing of this current magnitude of oil development has happened here before.
Yes, there was an oil boom 30 years ago. And yes, the area bustled with activity and promises of what was to come.
But those promises didn’t necessarily come true and the activity slowed almost to a halt.
Many would say, however, that there are some distinct differences between this present oil boom and the boom of yesterday, making the projected oil activity and population growth of McKenzie County that much more thought-provoking.
According to Allison Ritter, Public Information specialist for the N.D. Department of Mineral Resources, Oil and Gas Division, for the next few years there will be an estimated 225 rigs in western North Dakota, and they’re not going anywhere.
Ritter states that 225 rigs can drill 1,100 to 2,700 wells per year. There are 5,000 wells needed to secure leases in western North Dakota, and 225 wells can drill enough wells to secure those leases in 2.5 years.
Even more staggering is the estimation that if those 225 rigs accomplish what the Oil and Gas Division is projecting, then there could be 33,000 wells drilled over the next 14  years.
“There are already 5,951 active wells in western North Dakota,” Ritter states. “If 2,700 wells are drilled per year, then approximately 28,000 additional wells will be drilled in the next 14 years.”
28,000 additional wells would mean that in 14 years, western North Dakota could have a total of 33,000 active wells.
“This is, of course, if conditions are perfect,” Ritter states. “And conditions are never perfect.”
The Oil and Gas Division further states that a rig count of up to 225 could create 12,000 to 27,000 jobs and another 10,000 jobs operating wells and building infrastructure.
In addition, 33,000 active wells could create 30,000 to 35,000 long-term jobs in western North Dakota over the next 14 years.
Presently, according to Ritter, the total rig count is 197, so that is still a ways off from the estimated 225 total rigs in western North Dakota.
The main reason being that, “A lot of rigs actually need to be built,” Ritter states. “The oil industry is moving faster than rigs can be made, so operators are building them and bringing them in as soon as they can.”
Ritter also states that the Oil and Gas Division is on track to issue 1,800 permits this year, whereas in 2010, 1,600 permits were issued.
It is interesting to note that in 1980, at the height of the last oil boom, the Oil and Gas Division only issued 1,100 permits, and the average number of permits issued from 1975 to 1985 was around 650.
While these statistics don’t guarantee anything, they do indicate a surprising and stunning level of activity compared to that of 30 years ago.
Finally, the Oil and Gas Division reports that in August of 2011, 444,000 barrels of oil were produced per day.
“That is over 25 percent more barrels per day than were produced a year ago,” states Ritter.