The Current Bakken Service Model

By Luke Geiver | August 14, 2015

The economic opportunity produced by the Bakken shale play has created a new breed of energy service company. From the time the play first started ramping up, through the rush to hold acreage by production and on to the infill development stage of the Bakken today, the environment for startups has been exceptional. Companies like Newkota Sales & Rental, a Minot-based entity formed in 2011 when two oilfield veterans left a much larger energy service firm to start their own unique flowback tank and rental service, have thrived the past few years. At their first client meeting, the two-man Newkota team was asked for four flowback tanks. Newkota had only built and paid for two. “We were excited at first, and then unsure,” Kent Kirkhammer, U.S. operations manager for Newkota, told us. “The next meeting they asked for 20.” The Newkota story in this month’s issue, “Getting It Done No Matter the Price,” shows how a Bakken startup evolves through periods of high activity to the current pace.

Newkota’s story is not unique. Many companies have found comparable success, and many are now also encountering a staple challenge of the oil industry––low oil prices––which the Bakken hadn’t seen at this level. Brett Tinnes, 24, of Tioga, N.D., who oversees Red Deer Ironwork’s Minot location, had not been through an activity slowdown since he started three years ago, nor had his co-workers. Twenty-eight years old or younger, each is still figuring out how to learn from the veterans they talk to and navigate the current low-crude price environment. We featured Tinnes in this month’s story, “Getting It Done No Matter the Price,” because it was clear after talking to and being around him that he represents the new model of young energy service firm employee. Like many other industry workers, passionate but relatively new to the field, he is trying to block out the possible negatives associated with an activity slowdown and instead focus on getting the job that needs or can be done, done.

Getting the job done is linked to the opportunity presented by supply, demand and the price of oil, which we all know. But the simple nature of supply and demand or the impact the price of oil has on industry activity is not so clear when you talk with analysts. Patrick Miller writes in his feature story, “Dealing With Rig Decline,” that consensus among analysts is nonexistent. Some believe production is set at current levels for years to come while others believe it will drop below 1 million bopd next year. They all make valid points, so who is right? It would take more space than an editor’s note to offer an answer, but the success of Newkota and RDI in the current conditions is worth noting, a theme each team touched on. The oil in the Bakken isn’t going anywhere, they both said, and, both added, “neither are we.” Again, without offering an answer to the question above, I don’t think any of us could go wrong picking the side that includes companies that have operated in the Bakken and made it.

Luke Geiver
Editor
The Bakken magazine
lgeiver@bbiinternational.com