N.D.'s No. 2 ranking surprises Oil Patch

The numbers and their increase are tantalizing and surprising, even to the experts in North Dakota’s Oil Patch watching the crude flow day by day.

Five years ago, when the Bakken boom began, the state’s oil production was crawling along at 118,103 barrels per day, on average, in March 2007. Only a tenth of what Texas was producing, and a fifth of what Alaska and California pumped every day.

But the hydraulic fracturing perfected to use high-pressure fluids to bust open the “tight” shale formation 2 miles below and allow the sweet crude to fill well pipes opened up what is now the biggest, busiest petroleum play in North America.

On Monday, North Dakota’s chief regulator of the oil industry announced the latest figures available showed that in March the state produced another record, 17.84 million barrels of crude oil — 575,490 barrels each day — pumped out of a record 6,636 wells.

That pushed North Dakota past Alaska into the No. 2 rank among oil-producing states. Alaska produced 567,381 barrels per day in March, in line with a long-term slide in output. Texas produced 1.7 million barrels per day in February, according to the U.S. Energy Information Administration, continuing steady growth over months.

If the growth continues at the same pace as the last year has seen, North Dakota will break the 1 million barrel-per-day line a year from now.

Officials didn’t expect it so fast

“It happened sooner than I anticipated, and obviously, it’s exciting,” Mayor Ward Koeser of Williston, N.D, said of the new state ranking. “It’s neat for North Dakota to be in that position. I think it shows the rest of the country really what a top player North Dakota is now in the oil industry.”

He sees reporters hit Williston from around the world and recently asked a German journalist why she came so far, Koeser said.

“Her comment was ‘In Germany, we look at what’s happening in northwest North Dakota as to how it will impact the U.S. economy.’”

No single person, perhaps, has represented the Bakken boom more than Harold Hamm, founder, CEO and chairman of Continental Resources, which has nearly 10 percent of the drilling rigs in the state and is the biggest producer of sweet crude from the Bakken and Three Forks formations. For more than a year, he’s been saying he thinks there are as many as 24 billion barrels of recoverable crude oil in North Dakota’s Bakken formation, twice or three times what state and federal officials have projected.

And the ascendance of North Dakota into the No. 2 slot came quicker than even the bullish Hamm expected. In January, Hamm told the Herald he figured it would be well into 2012 before North Dakota’s production would match Alaska’s.

On Tuesday, Hamm preached caution in thinking North Dakota has eclipsed Alaska’s crude production in any big way.

“It could be due to the winter that (Alaska’s) production could have been hurt a little bit more,” Hamm said from his headquarters in Oklahoma City. “But it’s good for North Dakota.”

Wayne Biberdorf of Williston, the state’s energy impact coordinator, said North Dakota passing Alaska in oil production wasn’t a surprise, but came earlier than many expected.

“People within the industry saw what was going on in North Dakota and Alaska and were anticipating this,” said Biberdorf, a consultant and retired Hess Corp. engineer.

Gov. Jack Dalrymple said he was expecting the state would pass that milestone by the end of the year.

“We’re like seven months ahead of schedule,” Dalrymple said.

Hamm: Alaska’s taxes too high

In Hamm’s eyes, Alaska’s long decline in production from 2 million barrels a day in the 1980s to one-fourth that in March is partly the state’s own fault.

“They have a very, very high tax rate that they imposed that basically stopped exploration up there,” he said.

Meanwhile, the big push in North Dakota is to get more efficient with each drilling rig, getting more wells faster from the same equipment, Hamm said.

Early this month, a record 212 rigs were drilling for a day or two; Tuesday, the rig count was 208.

Some concerned about impact

Some look at the big growth with some skepticism.

“Obviously, with this oil resource, we have been blessed with in North Dakota, no credit belongs to anyone in elected office as we know we are going to see this increase,” said state Sen. Ryan Taylor, a Democrat gubernatorial candidate.

“The bigger story to keep in our minds as we develop this resource is the impact on the communities of this production.”

Taylor said a recent study showed North Dakota returned only 8 percent of its oil-related tax monies back to the communities in the oil field, compared with states like Wyoming and Colorado that return 35 percent and 60 percent, respectively, of such funds back to the communities. He said Dalrymple has been “too little, too late,” in helping direct oil impact aid to cities and counties in the Oil Patch that need new roads and housing and other infrastructure.

Boom busting out over cities

Koeser figures Williston’s population is 20,000, by Census-taking standards, an increase of two thirds in just five years.

“But there are probably (a total of) 30,000 people living in the city, in RVs and trailers and man camps within a mile or so of the city,” he said.

The city’s budget has nearly doubled in the past year, from about $32 million to about $65 million, Koeser said. The city is quickly putting together a short-term, $8 million plan to fix the sewer system. That will buy the city two years, when they are scheduled to put in a new, badly needed $90 million system, he said.

There’s no longer “fast food,” in Williston —the lines are long at McDonalds and Taco Johns — and the traffic is loud and heavy at times, he said. But the wild rumors of out-of-control crimes are not true, and there are as many opportunities as challenges, he said.

There were three new motels built last year and six more are under construction, and there’s plans for another half dozen or so, he said.

On Tuesday, Koeser helped break ground on another big housing development.

Stephen Lee is a reporter at the Grand Forks Herald, which is owned by Forum Communications Co.

Tags: north dakota, news, oil, energy