Report: S.D. unlikely to have major oil boom like N.D.

PIERRE, S.D. — South Dakota will not experience a boom in oil production like the one sweeping across western North Dakota, according to a study released Wednesday by Gov. Dennis Daugaard’s office.

The study, presented to a state legislative panel, concludes that South Dakota’s oil production most likely will remain steady at the current level of 1.6 million barrels of oil a year. Even under the most optimistic scenario, which assumes extensive additional exploration, South Dakota’s annual production will rise only to 3.2 million barrels a decade from now and 6.5 million barrels after that.

In contrast, North Dakota last year produced 152 million barrels of oil.

“We will never see the oil development and gas development that North Dakota has seen, but that doesn’t mean we don’t have potential,” state Geologist Derrick Iles told lawmakers.

Daugaard had two teams of state officials studying the potential for oil and gas production in South Dakota and what the state should do to prepare for any growth. In the meantime, the Legislature appointed a committee that has been looking at whether any state laws dealing with oil and gas development should be changed.

Lawmakers said South Dakota’s best bet for development is to provide materials and services to North Dakota’s oil industry. For example, some South Dakota companies are making prefabricated housing to house workers in North Dakota’s oil fields, and South Dakota might be able to supply sand or clay used in drilling.

In addition, many companies in North Dakota’s oil industry want to set up support operations outside the oil fields to escape exorbitant costs for housing and other services in the area.

“We could see a large boom in all the other industries that are related to the oil and gas business,” said Rep. Roger Solum, R-Watertown, chairman of the Legislature’s Oil and Gas Study Committee.

State officials have speculated in the past few years that North Dakota’s oil boom might spread south, but the study released Wednesday is the first to make specific predictions.

Iles said the Bakken Formation, which produces most of North Dakota’s oil, doesn’t extend much into South Dakota, but more oil could be discovered in the Red River Formation that produces South Dakota’s oil in Harding County in the state’s northwest corner.

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