(Photo courtesy of State Historical Society of North Dakota, William E. (Bill) Shemorry Photograph Collection)

April marks 65 years since North Dakota first became an oil producing state. Although there have been ups and downs, the industry continues today and is among the top oil producers in the world.  And it all started with the Clarence Iverson #1.

According to Clarence Herz, legend had it that when a landman approached a North Dakota wheat farmer about leasing his mineral rights for oil exploration he said he’d be glad to sign a lease and quipped, “I’ll drink all the oil you get in North Dakota.”

Herz continues:
On April 4th, 1951, North Dakota, after unsuccessfully exploring for 34 years, became the 27th state to produce petroleum.  The discovery well, Amerada Petroleum’s Clarence Iverson #1, produced nearly 250 barrels of oil per day.  It was North Dakota’s only producing well in 1951, as the other 9 attempts, all outside of the Williston Basin, were dry holes. The other nine wells, none of which were drilled by Amerada, were in Cavalier (4), Grand Forks, Morton, Pembina, Pierce, and Stutsman counties.

Click here to continue reading the history of North Dakota’s first well.

Made-in-Montana energy means good Montana jobs that on average pay two to three times more than the state average. Montana’s ability to create more good-paying energy jobs is immense – in fact, our state leads the nation in coal deposits. We are the nation’s fifth-largest producer of hydropower, with 23 hydroelectric dams across our state, and fifth in wind energy potential.

Montana is at the center stage of the national energy debate and provides the nation a template of a true all-of-the-above energy portfolio – we have coal, natural gas and oil, as well as renewables such as hydro, wind, biomass and solar opportunities. What makes our state most valuable are the people who make our energy systems work, towns like Colstrip that build communities around livelihoods reliant on good paying energy jobs: That is the good news.

The bad news: Montana energy jobs are under assault.

The past two weeks, I’ve heard from thousands of Montanans about the future and importance of made-in-Montana energy and made-in-Montana good-paying jobs.

During my week long tour across our state I saw once again, our vast natural resources and our true energy potential – from touring a wind farm near Baker – to seeing the hydropower facility at Helena’s Hauser Dam –to hosting a town hall in Colstrip – hearing directly from the community about the devastating effects President Obama’s anti-coal regulations will have on hardworking Montanans.

My statewide energy tour culminated this week at Montana Energy 2016, where over 600 people gathered in Billings for a Montana family conversation about our state’s energy future.

During the two and half day summit we heard a consistent and powerful message about the need to maximize our opportunity for growth and expand made-in-Montana energy and the good-paying jobs it supports.

Montanans are leading American energy innovation – Montanans’ like Chrystal Cuniff, a Montana Tech engineer from Choteau who’s helped drill the deepest well in the Gulf of Mexico or Ryan Lance, a Montana native, who’s leading one of the largest oil and gas companies in the world. Ashley Dennehey from Colstrip highlighted how the boilermakers, operators and other hardworking labor groups in her community are working hard to keep the lights on in the face of adversity.

We must continue investing in our two year colleges that provide training in trades like welding and heavy machine operations, so we can keep our kids here with good-paying energy jobs. And, we can’t forget that Montana coal provides tax revenues of $145 million year, which support our teachers and schools.

Montana should lead the world in developing clean coal technology.  We must continue to develop renewable technologies that will store the power created by wind. We should not allow Washington, D.C. and the Obama administration to dictate and regulate coal and gas out of existence.

We need more made-in-Montana energy, not more made in the Middle-East energy.

Make no mistake, President Obama’s Environmental Protection Agency regulations are killing Montana energy. Our country’s future is bright if we can unleash the power of innovation and rein in the overregulation of Washington, D.C.

I couldn’t agree more with what Chairman of the Crow Nation Darrin Old Coyote said in his keynote address at Montana Energy 2016, “All of Montana citizens need to work together for a better tomorrow: renewable energy, fossil energy, conventional energy, Indian or non-Indian. Regardless of political affiliation, whether we are Democrats, Republicans or Independents.”

Montanans can find better solutions than Washington, D.C. bureaucrats.

Bismarck, N.D. – The Bureau of Land Management’s (BLM) unnecessary and duplicative proposed rules for venting and flaring could reduce production on impacted leases, reduce state tax revenues and cost thousands of private royalty owners millions in lost royalty income, according to the North Dakota Petroleum Council (NDPC).

“The industry supports the goals of capturing greater quantities of associated gas and reducing waste but this one-size-fits-all federal process could come at a huge cost to North Dakotans while providing few – if any – benefits,” said Tessa Sandstrom, communications manager for the NDPC.

Early industry estimates anticipate production could decrease by more than 20 percent from more than 2,780 affected wells. This would cost the state $23.8 million in oil and gas severance taxes and North Dakota mineral owners more than $39.1 million in lost royalty income if the rule were fully implemented.

“The BLM claims that they could collect $23 million in additional royalty revenues for the federal government, but even if that were true, it would be at the expense of more than $62.9 million in tax revenues and royalty income in North Dakota alone,” said Sandstrom.

“North Dakota already has some of the most comprehensive regulations addressing flaring in the nation. Over the past two years, North Dakota has adopted a series of strict gas capture targets. At the same time, the industry has voluntarily made huge strides in natural gas capture by investing more than $13 billion in natural gas infrastructure since 2006. As a result, flaring has declined even as natural gas production increased.

“This progress has been despite federal regulations, which is often responsible for delays preventing industry from building infrastructure needed to capture more gas. BLM’s staff, time and resources are already overtaxed. Implementing rules and regulations that are already covered by state or other federal agencies is unnecessary and will only further burden employees and dilute their ability to perform their duties. BLM and other federal agencies could make a larger, more immediate impact on reducing flaring by instead fixing permitting, infrastructure and pipeline delays.”

About the North Dakota Petroleum Council
Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 500 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

Media Contact:
Tessa Sandstrom, Communications Manager  | ND Petroleum Council
701.223.6380, tsandstrom@ndoil.org

19th Annual Dickinson API Gumbo Cookoff – hosted by Dickinson API Chapter
18 teams will square off for best gumbo. Prizes, raffles, live music, dancing and more!
When:          Saturday, February 20
11:00 a.m.   Teams start cooking; public is welcome to attend and watch;
6:30 p.m.     Gumbo tasting starts until gone
8:30 p.m.     Live Music and dance with EZ Street Band
Where:         Quality Inn & Suites, Dickinson, ND
More Info:    http://apidickinson.org/event/api-gumbo-cookoff/?instance_id=30

4th Annual Bakken BBQ
Industry teams join forces to BBQ for Make-a-Wish Foundation!
When:          June 17, 2016
Where:         West River Ice Rink
More Info:   https://www.facebook.com/BBQ4Cause/?fref=ts

North Dakota Oil Can! Teacher Seminar
Teachers are invited to attend a seminar to learn the ins and outs of the oil industry, tour a well site and other facilities, and take lesson plans back to their classrooms all while earning continuing educatoin credits.
When:         June 20-23, 2016
Where:        Bismarck, ND
More info:  The seminar is limited to just 50 teachers, but there are still spots available. Learn more and apply at http://www.ndoil.org/events/teacher_education/.

By: MyraP. Saefong, Markets/commodities reporter

U.S. Energy Information Administration

Oil production from the Bakken and Eagle Ford shale plays in the U.S. has been falling since March, but traders shouldn’t be quick to assume that will translate into lower supplies and higher prices.

Total oil output from seven major U.S. shale regions is expected to fall by 118,000 barrels a day to about 4.95 million barrels a day in December, according to the Energy Information Administration’s monthly Drilling Productivity Report released Monday. The data show that production from the Bakken and Eagle Ford shale regions are both likely to show declines next month, which would mark 10 months in a row.

Read: Discontent with OPEC spills into the open

“Bakken oil producers are still going after the low hanging fruit and leaving the high ones until prices go back up,” said Bob van der Valk, senior editor of the Bakken Oil Business Journal

Indeed, analysts have been quick to attribute the declines to low oil prices, with West Texas Intermediate crude futures CLZ5, -2.58%  down more than 17% year to date—and some have said that once a trend of production declines forms, higher oil prices will follow.

“There is no evidence at current prices that rig drilling activity will recover any time this year, so we can expect ever lower production every month well into 2016,” said James Williams, energy economist at WTRG Ecomomics.

He expects December production in the shale plays to be down 550,000 barrels a day from the peak seen in April.

But a closer look shows that production from the Permian Basin, which is located in West Texas and southeastern New Mexico, is forecast to climb by 11,000 barrels a day to roughly 2.02 million barrels a day next month. Output from that shale play has been climbing all year.

U.S. Energy Information Administration

“Right now, the Permian looks like the most profitable play,” said Michael Lynch, president of Strategic Energy & Economic Research (SEER).

That is due in part to location, he said. The Eagle Ford shale play is in South Texas, but Bakken Shale is located in eastern Montana and Western North Dakota as well as parts of Canada.

“You have to bring workers from outside North Dakota and so salaries for everything, even hamburger flippers, is elevated,” Lynch said. “Much less so in Texas.”

‘Quite possibly, the redeployment of money, rigs and personnel to the Southwest will mean that even low drilling activity allows shale-oil production to expand.’ ~ Michael Lynch, SEER

So, “quite possibly, the redeployment of money, rigs and personnel to the Southwest will mean that even low drilling activity allows shale-oil production to expand,” he said.

Williams, however, pointed out that the EIA report shows that the number of new oil barrels we can expect per rig showed no improvement in the Eagle Ford and Bakken, and the increase in the Permian was “minimal.”

“Previously, the barrels per rig often showed substantial gains as drillers became more efficient and focused drilling to the sweet spots,” said Williams. “We cannot expect efficiency gains at the same level that we experienced over the last year.”

Still, Lynch noted three key reasons why oil prices won’t climb soon: higher shale output, the return of Iran’s oil to the global market as sanctions are lifted following its nuclear agreement with western powers, and production increases elsewhere in the world.

The combination of those factors will mean there is “no room for prices to rise,” he said.

Retrieved 11-11-15 from MarketWatch.

Registration for the North Dakota Petroleum Council’s (NDPC) 34th Annual Meeting to be held in Fargo, N.D., on Sept. 21-23, 2015 will open July 8. The Annual Meeting will include presentations from several industry leaders and key decision makers who will focus on the biggest issues and challenges facing the oil and gas industry today.

In addition to the Annual Meeting, the NDPC will co-host an informational seminar, “Drilling Bits and Coding Bytes” that will be free and open the public. The seminar will focus on the technological advances and contributions that Fargo-area businesses are making to enhance the petroleum industry. A Bakken Basics Information Session will also be held for those wishing to learn more about oil and gas development from industry experts.

“We are excited to be in Fargo this year for our annual meeting,” said Ron Ness, president for the NDPC. “The opportunities extend far beyond the Bakken, into the Red River Valley and across state borders. There are tremendous opportunities for entrepreneurs to find their niche and help mold a modern, technology-driven oilfield. There’s no better place that proves that better than Fargo, which is home to world-class technology and research facilities.”

“We are so excited and proud to be hosting our first North Dakota Petroleum event in Fargo,” said Jill Halvorson with the Fargo-Moorhead Convention & Visitors Bureau. “It is an honor to be able to show off what we love about Fargo to a group that is coming from all across our great state. We will be pulling out all the stops to make sure that when they leave on Sept. 23, the question will be ‘When can we come back?’”

The information sessions and seminar will be held Monday, Sept. 21 in the Fargo Theater in Downtown Fargo and are free to attend.

The NDPC Annual Meeting will be held at the Ramada Plaza Suites on Sept. 22 and 23. Registration for NDPC members is $300 and $600 for nonmembers. For registration and more information about the meeting, including a full list of hotels in Fargo, dining, flights, and the most up-to-date agenda, visit https://annualmeeting.risprojects.org/Default.aspx.

Media wishing to register for the annual meeting may request media credentials from Tessa Sandstrom at 701-557-7744 or tsandstrom@ndoil.org.
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Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 525 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

Media Contact:
Tessa Sandstrom | Communications Manager, ND Petroleum Council | 701.223.6380 | tsandstrom@ndoil.org

The Northern Plains Resource Council (NPRC) has asked the Board of Oil and Gas Conservation to commence rule making to impose quarter mile (1,320 ft) setbacks of drilling rigs from occupied dwellings. This is a greater distance than the proposal struck down before the legislative Senate Natural Resources committee just months ago, after ample testimony on both sides.

NPRC claims that because other states have imposed setbacks, Montana should follow suit for the benefit of landowners. However, existing statute and administrative rules, along with the structure and function of the BOGC, are a made in Montana solution that works. Using a checklist of out of state rules and regulations to shape policy in Montana is not a good idea. Doing so neglects to take into account those attributes which are unique to Montana.

This Wednesday, at a public meeting before the Board of Oil and Gas Conservation (BOGC), the Montana Petroleum Association (MPA) will be providing comments on how implementation of the proposed rule would negatively impact oil and gas opportunities in Montana, siting that:

• Montana’s drilling and permitting activity pales in comparison to other states who’ve elected to impose setbacks, especially with consideration to densely populated areas
• Other states do not have the same protest ability that Montana landowners do with regard to oil and gas drilling
• The public, including land/surface owners, have considerable access to the BOGC
• Montana’s BOGC is set up to mitigate concerns on a case by case basis; ensuring responsible and efficient development of mineral resources
• If imposed, drilling opportunities in Montana would be severely impacted, with many small and exploratory oil and gas operators essentially placed out of business without the ability to drill into small target formations
• Many claim horizontal wells have greater flexibility in surface placement, however, operators seek to evenly space wells within a DSU (drilling spacing unit)
• Setbacks would reduce the number of wells there could be in a given DSU (within the same lease), shorten laterals, thereby increasing wasted oil and gas reserves, and lessening both production revenue (including that to the state and counties) and royalty payments to mineral owners, which include universities, hospitals, and charitable organizations
• Setbacks neglect to recognize that minerals are the dominate estate (under common law) in split estate scenarios.
• Setbacks act as a taking of mineral owners rights without compensation
• Correlative rights of mineral owners are compromised by setback rules administered as a “one-size-fits-all” rule
• Potential legal conflicts exist with regard to treatment of existing leases under setback rules
• Surface use agreements are currently negotiated between landowner and operator, prior to drilling
• The BOGC sites less than a handful of cases wherein a surface owner came before the Board with a concern over the placement of a well
• The BOGC currently has the ability to exercise authority over well placement to mitigate surface owner concerns when necessary, based on potential harms
• Montana has a longstanding history of environmentally responsible development of oil and gas, without negative impacts on air, soil, or water

The rule would have widespread effects on Montana’s economy and on mineral rights. Mineral owners, royalty recipients, and oil and gas operators with an interest in preserving future drilling opportunities in the Treasure State ought to weigh in at the June 24th meeting at the Board of Oil and Gas Conservation office in Billings, 2535 St. Johns Avenue, at 1:00 pm.

Public hearings will follow at a date TBD, should the Board commence rule making.

Interested parties may contact the Montana Petroleum Association at mpa@montanapetroleum.org to stay updated on the issue, and to be notified of future opportunities for public comment.

Contact: Jessica Sena, 590-8675

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“Economic Contributions” of the Oil and Gas Industry in 2013” Infographic

Bismarck, N.D. – The oil and gas industry has seen its economic output rise by 750 percent to $43 billion since 2005, according to a study conducted by the North Dakota State University’s Department of Agribusiness and Applied Economics. The study also found that the industry directly supported 55,137 full time equivalent jobs and supported another 26,403 secondary full-time jobs. This increase represents the growing importance oil and gas development has on the state’s overall economic health.

“This study helps confirm that the petroleum industry is one of the largest basic-sector industries in North Dakota,” said Dean Bangsund, co-author of the study and research scientist for the department at NDSU. “Although activity is concentrated in the western part of the state, the magnitude of the contributions to both the state and local governments and the sheer volume of secondary economic effects in nearly all sectors of the North Dakota economy would suggest that the economic effects of the industry are felt statewide.”

Because the industry relies on hundreds of contractors and subcontractors, the economic contributions extend beyond the mining and extraction industries. According to the study, retail trade once again saw the largest impact, taking in $11.3 billion of the $43 billion. Households, or personal income, saw the second-largest impact at $9.3 billion, and the Finance, Insurance and Real Estate industry ($4.5 billion) overtook the government ($4.4 billion), which was the third-largest beneficiary in 2011. More than six other industries in North Dakota also benefitted from oil and gas development.

“The positive impacts of oil and gas development extend far beyond just the energy industry, and benefit many of our small and independent businesses in the oil patch and across the state,” said Rae Ann Kelsch, state director of the North Dakota chapter of the National Federation of Independent Business. “This is great news, but what is perhaps more exciting for our organization and members is the fact that the $43 billion only represents 48 percent of the total economic output. That means there is a demand for services within the state that our members can begin taking a look at and capitalizing upon to keep even more of those dollars here in our state.”

Among the study’s key findings:

· The oil and gas industry generated $43 billion for North Dakota’s Economy: In 2013, direct impacts of the oil and gas industry were $17 billion and secondary impacts were $25.7 billion for a total of $43 billion in business activity. For every dollar spent in the state by the oil and gas industry, another $1.43 in additional business activity was generated.

· The oil and gas industry created more than 80,000 jobs statewide: The study reveals that the oil and gas industry’s economic importance to the state includes direct employment for 55,137 full-time jobs and secondary employment of 26,403 full-time equivalent jobs.

· The industry contributed $9.3 billion in economy-wide personal income: The study reveals that the oil and gas industry contributed $9.3 billion in economy-wide personal income, including $1.425 billion in in-state private royalties and $300 million in lease bonuses. This is a 382 percent increase since 2005.

· The oil and gas industry generated $4.4 billion in government revenues: According to the study, the oil and gas industry generated a total of $4.4 billion in government revenues, including:
o $2.9 billion in gross production and severance taxes;
o $654 million in royalties, including $304 million in state royalties, $349 million in federal royalties, including tribal royalties;
o $49.6 million in state lease bonuses, and $4.1 million in federal lease bonuses that were returned to the state;
o $62.6 million in direct sales and use taxes;
o $50.5 million in corporate and personal income taxes;
o $54.6 million in licenses, permits, and fees;
o $12.5 million in charitable donations;
o $322.3 million in indirect state government general tax collections.

· The oil and gas industry supported $28.5 billion in non-industry business activity: The oil and gas industry benefited other industries and sectors statewide, including $11.3 billion in statewide retail sales; $4.5 billion in finance, insurance and real estate; $2.8 billion in business and personal services; $2.3 billion in communications and public utilities; $2.2 billion in professional and social services; $1.8 billion in construction; $1.5 billion in other sectors (various ag and mining); $1.3 billion in manufacturing; and, $838 million in transportation.

The North Dakota Petroleum Council (NDPC) has commissioned the study each biennium since 2005, and economic benefits have risen dramatically. Economic impacts have grown by 750 percent since the first study in 2005. State and local government revenues grew by more than $3.73 billion—or 1,150 percent—since 2005, while industry-wide direct employment grew by 992 percent from 5,051 in 2005 to 56,137 in 2013.

“We’ve seen a dramatic growth in production, and along with it, a dramatic growth in the economic contributions and associated job creation,” said Ron Ness, president of the NDPC. “Obviously, as prices decrease, the benefits previously enjoyed by the state government, households and other industries will be much lower as we work through the current price drop – no doubt impacts many are beginning to feel. We must be cautious to not further hinder these positive economic impacts through onerous or unnecessary regulation.”

The study was conducted by research scientist Dean Bangsund and Dr. Nancy Hodur, Research Assistant Professor at the NDSU Department of Agribusiness and Applied Economics. Bangsund and Hodur surveyed firms engaged in exploration and development, extraction and production, transportation, and processing of crude oil and natural gas. Data that was measured in this study but not included in previous surveys was an assessment of capital expenditures for infrastructure projects. To view the full study, visit http://ageconsearch.umn.edu/.

ATTACHMENT: “Economic Contributions” of the Oil and Gas Industry in 2013” Infographic

Since 1952, the Petroleum Council has been the primary voice of the oil and gas industry in North Dakota. The Petroleum Council represents more than 500 companies involved in all aspects of the oil and gas industry, including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain Region. For more information, go to www.ndoil.org.

Media Contact:
Tessa Sandstrom
Communications Manager
ND Petroleum Council
701.223.6380
tsandstrom@ndoil.org

INTRODUCTION by Bob van der Valk, Senior Editor  |  Bakken Oil Business Journal

“In October 2014 crude oil barrels went down 4M barrels/day from 1,186,228 to 1,182,174 barrels/day.  The drilling rig count dropped 2 from September to October, an additional 3 from October to November, and has since fallen 5 more from November to today. The number of well completions decreased from 193(final) in September to 134(preliminary) in October. Three significant forces are driving the slow-down: oil price, flaring reduction, and oil conditioning.”

NDIC Department of Mineral Resources Director’s Cut Newsletter
December 13, 2014 – Lynn Helms

Crude Oil production:
Sep Oil 35,586,832 barrels = 1,186,228 barrels/day
Oct Oil 36,647,393 barrels = 1,182,174 barrels/day (preliminary)
1,118,010 barrels per day or 95% from Bakken and Three Forks
64,164 barrels per day or 5% from legacy conventional pools

Natural Gas Production:
Sep Gas 42,400,766 MCF = 1,413,359 MCF/day
Oct Gas 44,317,381 MCF = 1,429,593 MCF/day (preliminary)(NEW all-time high)
Sep Producing Wells = 11,758
Oct Producing Wells = 11,892 (preliminary)(NEW all-time high)
8,406 wells or 71% are now unconventional Bakken – Three forks wells
3,486 wells or 29% produce from legacy conventional pools

Permits issued:
Sep Permitting: 261 drilling and 2 seismic
Oct Permitting: 328 drilling and 1 seismic
Nov Permitting: 235 drilling and 1 seismic (all time high was 370 in 10/2012)

Crude oil pricing:
Sep Sweet Crude Price = $74.85/barrel
Oct Sweet Crude Price = $68.94/barrel
Nov Sweet Crude Price = $60.61/barrel
Today Sweet Crude Price = $41.75/barrel (lowest since March 2009) (all-time high was $136.29 7/3/2008)

Rig Count:
Sep rig count 193
Oct rig count 191
Nov rig count 188
Today’s rig count is 183 (all-time high was 218 on 5/29/2012)
The statewide rig count is down 16% from the high and in the five most active counties rig count is down as follows:
Divide -69% (high was 3/2013)
Dunn -26% (high was 6/2012)
McKenzie -15% (high was 1/2014)
Mountrail -20% (high was 6/2011)
Williams -16% (high was 10/2014)

Comments:
The drilling rig count dropped 2 from September to October, an additional 3 from October to November, and has since fallen 5 more from November to today. The number of well completions decreased from 193(final) in September to 134(preliminary) in October. Three significant forces are driving the slow-down: oil price, flaring reduction, and oil conditioning. Several operators have reported postponing completion work to achieve the NDIC gas capture goals. There were no major precipitation events, but there were 9 days with wind speeds in excess of 35 mph (too high for completion work).

Over 95% of drilling still targets the Bakken and Three Forks formations.

The drillers outpaced completion crews in October. At the end of October there were about 650 wells waiting on completion services, an increase of 40.

Crude oil take away capacity is expected to remain adequate as long as rail deliveries to coastal refineries keep growing.

Rig count in the Williston Basin is set to fall rapidly during the first quarter of 2015. Utilization rate for rigs capable of 20,000+ feet is currently about 90%, and for shallow well rigs (7,000 feet or less) about 60%.

Drilling permit activity peaked in October as operators worked on their summer programs, planned locations for next winter, and adjusted capital budgets.

The number of rigs actively drilling on federal surface in the Dakota Prairie Grasslands is down from 6 to 3.

Activity on the Fort Berthold Reservation is as follows:
28 drilling rigs (11 on fee lands and 17 on trust lands)
386,679 barrels of oil per day (149,547 from trust lands & 237,131 from fee lands)
1,371 active wells (1,044 on trust lands & 327 on fee lands)
172 wells waiting on completion
346 approved drilling permits (306 on trust lands & 40 on fee lands)
1,997 additional potential future wells (1,224 on trust lands & 773 on fee lands)

Seismic activity is slowing down with 5 surveys active/recording, 1 remediating, 0 suspended, and 1 permitted. There are now 3 buried arrays in North Dakota for monitoring and optimizing hydraulic fracturing.

North Dakota leasing activity is very low, consisting mostly of renewals and top leases in the Bakken – Three Forks area.

US natural gas storage is now 10% below the five-year average indicating slowly increasing prices in the future. North Dakota shallow gas exploration could be economic at future gas prices. As you are aware there is some exploration underway in Emmons County. The first well will be on confidential status until 12/23/14.

The price of natural gas delivered to Northern Border at Watford City is down $0.76 to $2.98/MCF. This results in a current oil to gas price ratio of 14 to 1. The percentage of gas flared dropped to 22%. The Tioga gas plant remained below 70% of full capacity due to delayed expansion of gas gathering from south of Lake Sakakawea.
capture percentage was 78% with the daily volume of gas flared from Sep to Oct decreasing 32.8 MMCFD. The historical high flared percent was 36% in 09/2011.

Gas capture statistics are as follows:
Statewide 78%
Statewide Bakken 78%
Non-FBIR Bakken 79%
FBIR Bakken 75%
October 2014 capture target =74%
January 2015 capture target =77%

BLM revised final regulations for hydraulic fracturing on federal and Indian lands were sent to the White House Office of Management and Budget for interagency review on Oct 26 and Department of Interior continues to be committed to their goal of issuing a final rule by the end of 2014. After initial publication in 2012, BLM received over 177,000 comments and withdrew the rule. A new proposed rule was published in the federal register on 5/24/2013 and the comment period ended 8/23/2013. This time BLM received over 1.2 million comments. Thanks to all who provided comments in support of a “states first” policy.
BLM has started the process of new venting and flaring regulations with input sessions in Denver, Albuquerque, Dickinson, and Washington, DC.

EPA published an advanced notice of proposed rule-making to seek comment on the information that should be reported or disclosed for hydraulic fracturing chemical substances and mixtures and the mechanism for obtaining this information. The proposed rule-making is in response to a petition from Earthjustice and 114 other groups who are opposed to the use of the GWPC-IOGCC FracFocus website process of chemical disclosure and any type of trade secret protection for hydraulic fracturing fluid mixtures. These groups are requesting EPA regulation of chemical disclosure under the federal Toxic Substances Control Act.

“What we see is the technology is changing rapidly.
We want to stay at the forefront of that.”

Are regulatory updates across the Rockies states encouraging or hindering reusing produced water for fracking?
For us, in the Piceance basin, I’m going to say encouraging. The state is really supportive of water sharing agreements within the Piceance basin. So that’s a yes.

There is a lot of pressure towards reusing produced water for fracking currently – how can operators manage these pressures?
I believe most operators want to reuse their water, and for us there are regulatory pressures. Because we use slick water approach to complete our wells, it makes it easier for us to recycle our water. When you go to the front range, where operators’ chemistry requires a more complicated completion fluid, it becomes more difficult. So here, it’s very straightforward.
For us, there is a cost of recycling the produced water, but it makes more sense than pulling freshwater out of the river; this gives us a real advantage.

Water sources are under stress from industries besides the oil and gas industry, do you believe reusing produced water is the solution to water sourcing issues? Using produced water is a good option for all operators. Obviously, there are economic restraints depending on the quality of water you have to clean and where you have to take it to, to reuse it. Locally, we’re sensitive to the stress of sourcing freshwater – obviously in Colorado, water is key to everyone. We made the switch to recycling close to 100% of our produced water and really, in the local community’s eyes, it made sense. It’s something that we’re proud of.

Download the full interview here.