March 17, 2010

Oil expert: 2010 will be a monster year

By Tina Foreman
Farmer Staff Writer

With oil prices sitting close to the $80 mark and above, North Dakota saw the number of active rigs surpass 100 for the first time since February 1982. As of Monday, March 15, there were 19 rigs drilling in McKenzie County.
“Having the rig count this high brings with it lots of economic activity and lots of jobs, says Ron Ness, president of the North Dakota Petroleum Council. “It takes about $2 billon worth of investments each quarter just to keep the rigs running. However, while it presents opportunities for western North Dakota it also presents challenges.”
Residents of McKenzie County, especially new residents, are familiar with at least one of those challenges - housing. Although it’s tough for newcomers to the community to find housing, the lack of housing is also a good thing for the community.
“I don’t see McKenzie County having any kind of massive population explosion because there simply isn’t any place for them to live,” says Gene Veeder, Watford City Job Development Authority director. “We have been seeing a gradual growth, and I expect the growth to continue like that. It’s a good type of growth to have.”
Along with giving credit to the oil industry for bringing people to the area, Veeder also credits the industry with keeping people from leaving McKenzie County.
“We’ve always heard that people would continue living here if they could make a good living. The oil industry has offered that, and I think it is keeping a lot of people here,” comments Veeder. “When you have an increase in the capital being brought into a community people seem to stay longer.”
In October 1981, the active rig count hit a record high of 146 rigs, and even though the current number is still far from the all-time high, the oil industry is still producing more than those 146 rigs did in 1981.
“From what I hear, we can expect the rig count to increase by 25 percent by late summer,” adds Ness. “Nobody knows how high the rig count will get, but I doubt that we have the infrastructure or manpower to support activity near the all-time high for too long. However, we have to remember that today’s drilling rig does what eight rigs could do back in 1982, does it in one-third of the time and is much safer. Therefore, in terms of drilling wells and productivity, we have already surpassed the 1981 level. The technology is truly amazing.”
How long it will last and how big Watford City will get are two questions that go unanswered. However, for many people in the oil industry, especially in western North Dakota, this isn’t their first time experiencing a boom and their conservative manner helps make the growth a little easier to handle.
“I think 2010 is going to be a monster year for North Dakota’s oil activity,” states Ness. “We will continue to see peaks and valleys in the activity, but on a much larger scale than we have seen in the past two decades.”