Oil boom drives on

Oil production in North Dakota has increased more than 600 percent in the past several years, says Tessa Sandstrom, communications manager for the North Dakota Petroleum Council.

Sandstrom said oil production has increased from 35.7 million barrels of oil in 2005 to 237 million barrels in 2012.

She spoke to members of the North Dakota Professional Communicators at their annual meeting in Minot April 19.

Sandstrom, who is originally from New Town, said petroleum council members produced 98 percent of the 237 million barrels of oil that were extracted in North Dakota.

The council, with its headquarters in Bismarck, is a trade association that represents more than 400 members in all aspects of the industry, including oil and gas production, refining, pipelines, transportation and mineral leasing.

“North Dakota has been an oil-producing state for about 60 years,” Sandstrom said.

She said there have been some past boom cycles but the present one is entirely different than the previous ones.

“In those past years the success rate was around 30 percent. With horizontal drilling and hydraulic fracturing, we have a 99 percent rate so they know when they go out there and drill that they’re probably going to have it pretty good,” she said.

“What truly unlocked the potential in the Bakken was the combined technologies of hydraulic fracturing and horizontal drilling,” Sandstrom said.

As of February, she said the state had 8,500 wells and was producing about 779,000 barrels of oil per day.

“We remain the No. 2 oil-producer in the nation. We were at No. 8 in 2005,” she said, adding, “My first two months on the job, we actually jumped past two states in just a matter of a few months.”

North Dakota provides about 11 percent of the U.S. oil production and the Bakken accounts for 40 percent of the nation’s increase in domestic oil production, she said.

“We are helping make our nation closer to energy independence,” Sandstrom said.

“The Bakken reserve is huge. It’s a world-class resource, but right now with current technologies, we’re only recovering between 3 and 4 percent so if we can increase that recovery by just 1 percent, it will mean another million barrels of oil,” she said.

Sandstrom said with the current technology, each well is expected to produce for about 30 years, and each one will produce about 550,000 barrels of oil.

“It costs approximately $10 million to drill a well, according to our last economic impact survey,” she said. “Each one garners about $20 million net profit. It pays about $4.4 million in taxes, $7.6 million in royalties, $1.6 million in salaries and wages and considering that we have 8,500 wells operating, those numbers add up.”

When the group did its first economic impact study in 2005, she said it showed about a $4.4 million impact on North Dakota’s economy. She said that has increased now by almost 600 percent to $34.4 billion.

There are about 40,856 industry jobs in North Dakota, she said. Along with the roughnecks, truckers and others working with the drilling and other operations in the oil patch, she said it includes legal services, administrative, communication professionals, human resources everything that might be supporting the oil and gas industry.

“On top of that there’s also about 18,000 secondary jobs that the industry also supports,” Sandstrom said.

The petroleum council works extensively with the public, those in the oil and gas industry and government officials on issues and concerns, including roads and other infrastructure, fracking and taxes.

Sandstrom said the council has been a strong advocate for western North Dakota to help with the impacts in that area.

“There’s been a lot of growth, and especially for a state that (in) my first job out of college I had to try and figure out how are we going to get people to North Dakota? How are we going to keep our schools from declining?

“We don’t really have that problem too much anymore. It’s definitely been a lot of growth for the western part of the state, where much of it is very rural and there are difficult challenges,” she said. “We realize as an industry we have to work to open lines of communication and help them meet those impacts.”