Elected officials, government experts and industry leaders on Wednesday all hailed a return to optimism in North Dakota's Bakken Shale play, although they aren't anticipating a return to the past's robust oil production growth for a few years.
Speaking at the Williston Basin Petroleum Conference (WBPC) in Bismarck, ND, Gov. Jack Dalrymple said the state's golden goose of oil/natural gas resources "will continue for decades to come," while Bismarck Mayor Mike Seminary and Canada's Consul-General for the upper U.S. Midwest region, Jamshed Merchant, both emphasized that fossil fuels will continue to be a key to economic growth on both sides of the U.S.-Canada border.
Separately in an address, Jim Volker, CEO of Whiting Petroleum Corp., the Bakken's largest producer, promised his company will complete more wells this year in direct response to a call from Dalrymple for the industry to do so. Volker called the WBPC attendees "Whiting partners" and assured that the company will continue to be a "good steward of the Bakken resources and a good corporate citizen" in the state through all of the commodity cycles.
Lynn Helms, director of North Dakota's Department of Mineral Resources, chimed in with a NASCAR analogy that after a "wreck" from a second drop in oil prices in the 1Q2016, it now appears that industry is out of "neutral" and driving forward with prices in the high $40/bbl range, hitting $49/bbl Wednesday morning, according to Dalrymple. The officials see them as continuing to head upward.
"A lot of companies in the Bakken had taken 'pit stops' in the low price trough of $20/bbl range, but now they're back on the race course," said Helms, the state's top oil/gas regulator.
The recovery outlined by Helms at the WBPC meeting envisions a gradual price resurgence over the next two to three years, driven by different price ranges for crude:
$45-55/bbl prompting operators to begin bringing back online the 1,523 inactive wells in the state in 3Q2016;
$55-60/bbl kicking off the start of completion of the state's 900 drilled-but-uncompleted (DUC) wells late this year and early next; and
$60-65/bbl beginning the drilling of new wells again later in 2017.
Continuing his race car analogy, Helms said the Bakken is in lap 100 of a 500-lap race. He sees the recovery getting well underway with rig counts of 50 to 60, compared to the current 28 rigs, and full-scale activity starting in 2017-2018 with rig counts reaching 75 to 100 by then.
Dalrymple said North Dakota has set a "new standard" for state support of a key industry, noting that for a recent five-year period before the price crash, the state contributed $1 billion annually to support the oil/gas industry's rapid growth, such as providing more than $1 billion in highway upgrades.
Canada's Minister of Natural Resources recently offered the perspective on oil and natural gas that the fossil fuels are "here to stay" in Canada, said Merchant, who noted that Canada and the United States do $670 billion in annual trade that equates to 9 million U.S. jobs and the two countries' longstanding friendly relationship is "based on market values."
The minister emphasized that "in short, oil and natural gas are not going away soon," and for critics, Merchant emphasized that "this is not a matter of reinforcing the past, but more a statement on building the future."
Whiting's Volker reemphasized that his Denver-based company's major bet is on the Bakken where 80% of its assets are located and where some of the company's inactive wells will start to be brought back online soon. Longer term, he views the DJ Basin in part of Weld County in northeast Colorado as a "second Bakken," lagging by about six years where the North Dakota play is.
Volker estimated that if prices can stabilize above $50/bbl, the initial returns on a Bakken well can be 50%. Whiting holds 5,500 drilling locations in the Bakken and 92% of its acreage is in the five core counties that are now the only place much activity is taking place.