Bakken Q&A: 2015 Review, 2016 Preview

The Bakken's most recognizable North Dakota team--the North Dakota Petroleum Council--explains its 2015 accomplishments, 2016 goals and the mood of the play.
By The Bakken Magazine Staff | December 02, 2015

What was your team’s greatest accomplishment this past year?

Ron Ness, president: Passing landmark oil tax reform that creates a predictable flat and more competitive long-term oil tax structure for industry, the state and Three Affiliated Tribes.

Kari Cutting, vice president: Testifying before Congress on the value of allowing the export of crude oil globally.  Crude oil is the only made-in-the-USA commodity that has a federal constraint on its ability to capture new markets.  There is so much value to allowing U.S.-produced crude oil to be exported, including providing energy to Europe rather than forcing them to rely on Russian energy; working within the NDPC Regulatory Committee to develop mitigation solutions for endangered or threatened species, and, working with the Department of Health, Department of Mineral Resources, the Governor's' office and landowners and industry to develop the North Dakota remediation resource manual to enhance communication between industry and landowners and provide a decision tree to effective remediation.

Tessa Sandstrom, communications manager: From an overall perspective, despite low oil prices, we’ve maintained a very strong membership and our events continued to be very well attended. I’m very proud of our companies for stepping up to help South Heart recently with its football field. The members of the community there were generous hosts of one of our Bakken Rocks CookFest and allowed us to use their field. When it came time to do some upgrades to the field, some of our members helped pay for the seeding.

How would you describe the Bakken in 2015?

Ness: 2015 was a market correction year in which everything related to the Bakken and oil industry was focused on efficiency and cost-reductions.

Sandstrom: The silver lining in the market correction is that it allowed for a time of progress in western impacts. The slow down offered a bit of a breather for the western counties to catch up, and the surge funding appropriated during the session was a huge help in this. One word that could also be used to define the Bakken in 2015 is resilient. The industry figured out ways to continue producing oil at low prices surprising everybody. Unfortunately market corrections also mean lost jobs and tax revenue for the state, but we’ve also seen companies do what they can to keep their best people during this downturn.
Outside of oil prices, what are the main factors that will drive the continued success of the Bakken?

Ness: Technology will drive the Bakken, not only in terms of making the Bakken economic at lower oil prices but in terms of efficiency of operations and resource recovery.

Sandstrom: Infrastructure and pipelines remain the key in capturing more natural gas and helping reduce traffic on our roads. Infrastructure build-out continues today, but more needs to be done.
What are the NDPC’s 2016 goals, and why?

Ness: The Bakken and other U.S. shale plays are in an energy war, and the NDPC has to sustain our presence and assist our members with the challenges of today and tomorrow.

Sandstrom: Our goal is to continue working with western leaders, landowners and other stakeholders to develop relationships and address some of the challenges we continue to face. This includes looking into the latest science and processes for mitigating and remediating spills and getting more infrastructure built.

Alexis Brinkman-Baxley, government relations manager: I think our goal is always to maintain our presence and voice as a facilitator of solutions, relationships and cooperation between industry, landowners, regulators and other interested parties. At the end of the day, it’s our job to make sure the industry is as successful as possible while taking care of this state we love.

What segment of the oil industry (technology, strategies, investments, research, etc.) has your team excited?

Ness: In 2015, the NDPC and others focused our efforts on new technologies for improving salt-water remediation. That’s a huge issue for the industry and landowners, and we are at the forefront of a mindset change in how to remediate the soil.

Cutting: The Bakken is still a hotbed for innovative technologies.  Currently, industry is able to recover up to 7 percent of the resource that exists two miles below the surface.  The potential to innovate and recover an additional 1 percent means 1 billion barrels of recoverable oil, so industry will develop the means to harvest more of the resource.  In addition, in this low-price environment, industry has adapted to reduce the cost of drilling and completing a well by as much as 20 to 50 percent, depending on the company and the location.  This is quite remarkable and proves how resilient the industry is to price change and the strength of its ability to adapt.

Brinkman-Baxley: I’m excited to see our company’s relationships with landowners grow. In 2015, NDPC worked with the Department of Agriculture to help pass legislation creating a pipeline reclamation program. As I traveled the state to attend events promoting the program, it became really clear that the biggest issue we face when working with landowners is communication.

The Bakken has bred an incredible range of stories. In 2015, which storylines were overtold, and, which were undertold?

Ness: The media’s desire to tell the story about the North Dakota oil “bust” was overplayed. This is not a bust—all markets and industries have corrections.  The under-told story is the incredible strides we made in gas capture.  The efforts and progress in the past 15 months have been truly amazing.
Sandstrom: Spills have also been over-reported. Yes, unfortunately spills happen, but more than 76 percent of them happen on the well site with no environmental impact whatsoever. Those that occur off of a well site are resolved within 30 to 180 days, but there hasn’t yet been a story on the many successful remediation cases that have finished or are taking place. There also isn’t much attention given to the role industry plays in our communities. I’m speaking not just in terms of jobs and tax revenues, but how companies and their employees volunteer and give time and money to their communities. It’s easy to talk about “big oil,” but never do they look beyond that and at the more than 60,000 people who are supported by the industry. 
How has the view of the Bakken changed in any way for those outside of the play?

Ness: I’m hopeful that more people across North Dakota will grasp the incredible economic driver the Bakken has become. It has driven our economic growth creating high-wage opportunities, which allows our sons and daughters to move back home, and, when partnered with agriculture it created an amazing statewide economy.

Sandstrom: Because of the reporting on the oil prices, I think many people are now picturing tumbleweeds and boarded-up main streets when, in fact, many communities are still bustling. Things have slowed down, yes, but we’re far from a bust.

What is the mood of your membership heading into 2016?

Ness: Pretty somber and a bit amazed, but focused on the task of competition.  There are many who relish a breather but this has gotten excessive.

What should the greater Bakken community—from oilfield firms to individuals somehow linked to the play keep in mind during what appears to be a lower for longer oil price scenario?

Ness: The onslaught of federal regulations is beginning to take its toll on the energy industry.  At some point, consumers must rise up and oppose the federal actions, which are going to substantially increase their energy costs and choices.

Sandstrom: The impacts of the slow down aren’t just isolated to the industry and their employees. The slowdown impacts each and every single one of us. Tax revenues are down, which impacts every North Dakotan. As production slows, so will the retail and service sectors from Williston to Wahpeton and beyond.

Brinkman-Baxley: We still need to make sure we have adequate permanent and temporary housing, build up our infrastructure, and maintain that quality of life. If we don’t do those things, we’re going to be back where we started when it is time to ramp-up again.