April 15, 2009

Oilfield slowdown being felt

By Tina Foreman
Farmer Staff Writer

Anyone working in the oil field will tell you that with their work comes busy times and slow times. And right now, McKenzie County is experiencing one of those slow times.
Spring is traditionally a slow time for oil field work because of road restrictions. The North Dakota Department of Transportation puts restrictions on roadways to help control the amount of damage to the roads caused by heavy loads during the time of year when highway pavements are most vulnerable.
It has been the NDDOT's experience that the most significant pavement damage occurs during the first four weeks after the onset of spring thaw, but road restrictions are not limited to any time period. The NDDOT conducts tests of its roadways before putting on or taking off road restrictions. Restrictions are removed when roadbeds are stable enough to carry legal weight traffic without damage. 
Even though road restriction are on most of the state’s roads making it difficult to move drilling rigs and other heavy equipment, most companies are breathing a sigh of relief that this long winter has finally come to an end.
“Heavy snowfall plugged all of our lease roads,” says Mike Juma, St. Mary Land and Exploration Company production superintendent. “This winter cost companies a lot of money just to keep roads open with all of the wind and snow. We are all ready for spring.”
According to Lynn Helms, North Dakota Industrial Commission Department of Mineral Resources director, worldwide demand for crude oil has fallen from 86 million barrels per day to between 83 and 84 million barrels per day due to the global recession.
“The drop in prices is the main factor for the slowdown in North Dakota,” says Helms. “But, the severe winter weather and now road restrictions make moving drilling rigs, hauling and heating water for hydraulic fracturing, and even trucking produced oil very difficult and even impossible at times.”
According to Helms, statewide daily production has fallen to 187,000 barrels per day in January and February 2009 from the high of 215,000 barrels per day in November 2008.  McKenzie County has been no stranger to the decrease in production. January production was 22,000 barrels per day and 23,000 barrels per day in February compared to 25,000 barrels per day in November 2008.
As of Monday, April 13, 2009 McKenzie County had only five active drilling rigs compared to 22 in October of 2008. The decrease in drilling rigs added to the overall decrease in oil field activity has caused companies to lay off workers statewide, with McKenzie County being no exception. Employers and employees are hopeful that the price of oil will continue to rise and steady out so that they can get employees back to work.
“Operators indicate that most Bakken drilling will be economical at $60 per barrel North Dakota price,” says Helms. “The NYMEX traders do not have oil reaching that price range until the last half 2010.”
The good news is that the McKenzie County Courthouse is still busy with Landmen researching new oil leases throughout the county.
“We are still seeing 20-25 landmen a day in the courthouse and there is a new company from Louisiana in the area with about 30 landpeople working in and out of the courthouse,” says Ann Johnsrud, McKenzie County recorder. “I would say we are doing about the same or maybe a little lighter on the document recording side, but all in all, we haven't really noticed that much difference within the courthouse.”
The good news is that as long as there are companies researching for oil leases, county residents can be confident that the oil activity within McKenzie County will continue, at least for the next couple of years.