January 5, 2011

Oil activity will only grow in 2011

By Tina Foreman
Farmer Staff Writer

Throughout 2010, McKenzie County residents have watched the oil industry grow. With increased school attendance, new businesses, added traffic and a decrease in available housing, all of which made it difficult not to notice. As we leave 2010 behind and head into 2011, it seems that the growth will not slow down. But as infrastructure catches up to the oil industry, the growth may not be as noticeable.
“2010 was the year that McKenzie County came into focus with the Bakken and Three Forks formations,” says Ron Ness, North Dakota Petroleum Council president. “2011 is going to be the year of infrastructure. We have gas plants, pipelines and water projects underway that will help get trucks off the road and make the oil industry run a little smoother around the area.”
To put into perspective the growth of the oil industry in a one-year time frame, one only has to look at the numbers. One year ago on Jan. 4, 2010, there were 11 active rigs in McKenzie County and 75 rigs operating in the state. One year later, as of Jan. 3, 2011, there were 40 active drilling rigs in McKenzie County and 157 active rigs in the state.
“Now that the leasehold in McKenzie County is mostly covered, companies will begin methodically working the area,” adds Ness. “I don’t expect this to slow things down at all, but I think it will make things a bit calmer and we will find a steady working pace.”
In addition to great economic times, McKenzie County and other oil producing counties should be looking forward to this legislative session, according to Ness.
“I think this is going to be a fantastic legislative session,” states Ness. “It is going to bring a lot of positives to oil producing counties, which will allow everyone to focus better on what is going on around us.”
With the price of oil hovering around $90 per barrel, companies are excited to be drilling into the Bakken and Three Forks formations. However, if the price drops below the $56 range, that could change.
“Personally, I think oil is a little over-valued right now,” adds Ness. “But, my only concern is that it stays over $56 per barrel, because that keeps the Bakken drilling profitable. I also don’t want to see it go over $100 per barrel because that drives fuel prices up and makes the oil industry go a little crazy. Right now things aren’t steady, but they are steadier than they have been all year.”
According to Ness, the biggest issue for the oil industry right now is the bottlenecks being created by lacking infrastructure.
“There are lots of bottlenecks out there now,” comments Ness. “But the industry is adapting, and there is always a company out there somewhere looking for construction work or to bring in a man camp, so it’s working out.”
As 2011 gets underway, it’s anyone’s guess what will happen in the oil industry. But according to industry experts, it doesn’t look like things will slow down anytime soon.