Tariffs, OPEC clouds loom over North Dakota oil market, says DMR Director
By M.K. French
Farmer Staff Writer
Mounting global uncertainties, primarily stemming from tariffs and OPEC’s shifting production strategies, are casting a shadow over the North Dakota oil market, though current output remains stable, according to the state’s top energy regulator.at the agency’s Director’s Cut meeting on April 22, 2025.
“We’re seeing longer laterals with less drilling rigs, less frack crews, and production is remaining relatively steady,” the Director stated during the meeting. When questioned about the potential for future production declines due to lower prices, the Director emphasized that current activity levels are the primary driver. “It’s really just a function of activity, and I don’t really think the price environment that we’re seeing right now is fully rooted in fundamentals of supply and demand.”
The Director pointed to several factors contributing to the current market uncertainty, including the ongoing impact of tariffs and sanctions, as well as OPEC’s recent decisions regarding output. “There’s a lot of...probably companies that are trying to figure out what tariffs mean to their cost of goods and services along with...sanctions,” the Director explained. “OPEC came out and I think they indicated to the market that they were going to increase output by 160,000 barrels. They...increased output 440,000 barrels which I thought was supposed to occur because of the sanctions on Iran and Venezuela. So again, there’s still kind of a lot of noise in the system and I think that that’s going to work its way out over the next few...months.”
When asked at what price point and for how long production might be significantly impacted, the Director highlighted the complex decision-making process for operators. “It’s likely that all companies, as prices dipped into the low 60s, that all companies are talking about that and...probably going to their service providers asking for cost reductions,” the Director noted, adding that factors such as financing, procurement costs, net revenue interests, and operating costs all play a role.
Despite the price fluctuations, the Director indicated that a substantial build-up of drilled but uncompleted wells (DUCs) is not anticipated this year. “We’re not hearing any...consideration of large DUC build-up,” the Director affirmed. However, the possibility of a slight reduction in drilling rigs was mentioned as part of normal budget planning, predating the recent price downturn. “We have heard that there’s potential for two rigs to be dropped in 2025 as part of normal...plan budgets...decisions that were made prior to the recent...price dips.”
The meeting also touched on Senate Bill 2397, which concerns the classification of stripper wells. In response to a legislator’s concern about companies potentially reducing production to achieve stripper well status and avoid taxes, the Director stated unequivocally, “No. I would say that no, no oil company wants to necessarily go into strip oil status. It probably doesn’t take much of an oil...price increase in order to accommodate for the difference there. So I would say that they definitely don’t want that. They’re optimizing production all the time.” The Director clarified that while the DMR is actively participating in discussions surrounding the bill, the agency did not help write it.
Finally, the Director provided an update on funding for cleaning up old oil spills, noting that the initial grant is nearly exhausted, with the state working to secure formula grant funding from the Department of Interior.
Overall, the DMR Director’s report suggests a North Dakota oil industry navigating global market complexities while maintaining a steady production pace, with operators focused on efficiency and adapting to evolving price signals.
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