May 15, 2020 -- Mr. Burgum goes to Washington
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Governor Doug Burgum stands outside the White House following a meeting this week with President Donald Trump to discuss North Dakota's response to the coronavirus pandemic.
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Oil Production Drops Below 1M Barrels/Day
March Numbers Not as Bad as Expected
North Dakota oil production began to fall in the month of March, but it didn't fall as quickly as state regulators had expected. However, when April numbers come in next month, average daily production will likely be below 1 million barrels per day for the first time since
January 2017.
During his monthly Director's Cut news conference today, Lynn Helms, director of the Department of Mineral Resources, said March production dropped just two percent, coming in at an average of just under 1.43 million barrels per day. Helms said natural gas production held relatively steady, averaging just over 3.1 billion cubic feet per day. The gas capture rate fell just a percentage point short of the state's target of 88 percent.
But Helms said more than 7,000 wells have been shut in since early March, amounting to a loss of more than 500,000 barrels of daily production. He said drilling and completion activity has also fallen sharply. The state now has just 12 active drilling rigs, and Helms said that could drop further into the single digits. He said there is also just one frac crew left, compared to 25 crews at the beginning of March.
Helms said there have been indications this week that oil markets may be stabilizing with the price of crude on the WTI index climbing to near $30.00/barrel. But Helms said there are also indications that supply still exceeds demand, so where the market heads next is anything but certain.
Click
here to listen to Helms' comments.
Helms said if the market rebound doesn't occur until the fourth quarter of this year, North Dakota producers could find themselves at a disadvantage in the push to re-start the industry because it's more difficult to recruit workers during the winter months.
Click
here to read or download Helms' Director's Cut.
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Budget Section Okays Well Plugging Program
The North Dakota Legislature's Budget Section voted today to approve a plan to launch a program to plug orphaned and abandoned oil wells, using $33.2 million in federal coronavirus relief funds.
The state has identified as many as 550 wells that have been abandoned or are at risk of becoming orphaned by an owner financially distressed by low oil prices. The money approved for the project is part of a total of $524 million given to the state as part of a federal relief package. Other major commitments for the money are going to the Departments of Health and Human Services for costs directly related to containing the spread of the virus, and to Job Service to cover the cost of the surge in unemployment payments related to the loss of jobs caused by the pandemic.
DMR Director Lynn Helms said the well plugging program could create 500 or more temporary jobs, which will help the state retain a workforce that will be needed to get the oil industry re-started.
Click
here to listen to Helms' comments.
State regulations require companies to post a $100,000 bond intended to cover the cost of plugging a well at the end of its useful life, but Helms said the cost actually averages closer to $150,000. The state can offset the costs with $10 million from the abandoned well fund and $6 million in reclamation bonds.
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North Dakota Wins Crude-by-Rail Case
The Pipeline and Hazardous Materials Safety Administration has pre-empted the state of Washington from using a state law to block Bakken crude shipped by rail through the state.
The Washington Legislature enacted a law last year that would prohibit the unloading of crude oil with a vapor pressure greater than 9 pounds per square inch. However, PHMSA cited a study conducted by Sandia National Laboratories which concluded that imposing vapor pressure limits would not reduce the risks of transporting crude oil and other flammable liquids by rail. The decision said Washington State’s vapor pressure requirement does not conform to U.S. Hazardous Materials Regulations and is an obstacle to accomplishing and carrying out Federal Hazardous Materials Transportation Law (HMTA).
Proponents of the law argued that Washington State has a legitimate public interest to protect its citizens from oil train fires and explosions, but PHMSA said a state cannot use safety as a pretext for inhibiting market growth or instituting a de facto ban on crude oil by rail within its borders. The agency said the state’s action "epitomizes the type of patchwork state regulation that Congress sought to avoid when it enacted the HMTA" and established regulations for the transportation of hazardous materials.
Click
here to read more about the PHMSA decision. Click
here to read an article in the Bismarck Tribune about the agency's decision. Click
here to read an article about the decision from Oilprice.com.
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Coal Creek Closing Fallout Continues
Regulators Looking at Reclamation Costs
With last week's announcement by Great River Energy that it plans to shut down Coal Creek Station by the end of 2022, North Dakota regulators are looking into the implications of reclaiming land where the plant sits and the 52,000 acres of land that has been mined for coal.
State reclamation laws require the land be restored to a condition as good or better than it was before mining began and the plant was constructed. Those laws are administered by the ND Public Service Commission.
PSC Commissioner Randy Christmann, in an interview on the radio program
Energy Matters, said he's hopeful the plant can remain in operation, but the PSC has to assume it will be shut down. Christmann said that means state regulators need to begin to assess how much it will cost to reclaim the land.
Click
here to listen to Christmann's comments.
Christmann said with the addition of more and more renewable (intermittent) generation, he's concerned about future reliability of the electric grid. He said baseload plants like Coal Creek Station are essential to ensure reliability, but their prospects are bleak if they aren't profitable.
Click
here to listen to Christmann's comments.
Christmann's fellow PSC members commented on GRE's announcement during their opening remarks at the PSC's Wednesday meeting. Chairman Brian Kroshus said he was concerned about the impact to the mine and plant workers and their families affected by the decision.
Click
here to listen to Kroshus' comments.
Commissioner Julie Fedorchak, like Christmann, cited concerns about the threat to grid reliability that closure of the 1,100-megawatt plant presents.
Click
here to listen to Fedorchak's comments.
Click
here and advance to the 17:24 mark to listen to the full
Energy Matters interview with Christmann.
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Wind Farms a "Penny on the Dollar" vs. Coal Creek
Erickson: McLean Co. Landowners Not Fans of Wind
The prospect of replacing the economic benefits generated by Coal Creek Station compared to construction of a wind farm in McLean County would be a "pennies on the dollar" tradeoff.
That's the conclusion of McLean County State's Attorney Ladd Erickson, who points out the lignite industry generates an estimated $5.7 billion in annual economic activity in North Dakota. Erickson said he is not opposed to wind generation, but not as a replacement for an efficient baseload plant like Coal Creek Station.
Click
here to listen to Erickson's comments.
Erickson said he's fighting hard to save Coal Creek Station, not just because of its value to the residents of McLean County, but because of its importance to maintaining the reliability of the electric grid. He said it's important to remember wind generation isn't always available, which could prove extremely dangerous during a bitter cold North Dakota winter, so it's essential that energy policy ensures the financial viability of baseload facilities.
Click
here to listen to Erickson's comments.
Erickson said he's been criticized for drafting amendments to the county's zoning ordinances that make it more difficult to site electric transmission lines in the county. But he said it was important to maintain the possibility of locating a buyer for the power plant and to protect the county's recreation industry. Erickson said he believes the county's actions regarding the prospects for locating a wind farm in the county reflect the wishes of area landowners.
Click
here to listen to Erickson's comments.
Erickson was interviewed by Scott Hennen on the radio program
Energy Matters. Click here and advance to the 29:40 mark to listen to the full interview with Erickson.
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McLean County Superintendents Support Coal Plant
In a letter written to the President/CEO of Great River Energy, superintendents of the six school districts in McLean County expressed their concern about the harmful economic effects associated with the possible retirement of Coal Creek Station.
The letter, which is dated April 20 before GRE announced its intentions to close the plant, said the superintendents believed the school districts, cities, county and the state would see three negative consequences:
- Loss of taxable valuation,
- Loss of coal production and coal conversion taxes, and
- Loss of students, for each of whom the schools receive $10,000 in state aid.
The superintendents urged GRE to continue its "outstanding award-winning investment at Coal Creek Station" and ... "showcasing your clean coal-fired electrical generating plant, a plant that is a model for all other plants around the world."
GRE indicated in a
letter to the county that it would voluntarily make payments of $15 million over five years to the county in lieu of the coal severance and conversion taxes related to Coal Creek Station. But the superintendents pointed out all the districts are making debt payments that extend beyond five years.
The letter to GRE was signed by Superintendents Brandt Dick from Underwood, Brad Rinas from Washburn, Shiela Schlafmann from Turtle Lake/Mercer, Andrew Jordan from Wilton, Nick Klemisch from Garrison and Travis Engen from Max. Click
here to see the letter.
Click
here to see a KX News story about the letter including interviews with Supts. Dick and Klemisch.
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PSC Approves Williams County Gas Plant
The ND Public Service Commission approved plans this week to construct the B. Sanderson Gas Processing Plant on a 39-acre site about 15 miles west of Williston.
The plant, to be operated by OE2 North LLC, will be capable of processing 250 million cubic feet of raw wellhead gas per day from Williams County and the surrounding area. OE2 will also own and operate a gathering system that will deliver wellhead gas to the plant. The natural gas and natural gas liquids produced at the plant will be delivered by pipeline to interstate transmission lines serving the Rocky Mountain, Midwest and Gulf regions.
The facility is estimated to cost $150 million and is expected to be in service by December of this year.
PSC Commissioner Randy Christmann said he was grateful to see the company proceed with the project because in the current economic downturn, jobs are badly needed.
Click
here to listen to Christmann's comments.
Click
here to read the PSC's Findings of Fact and Conclusions of Law approving the project.
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Williston District #1 to Accept D8 Students This Fall
On a 3-2 vote today, the Williston Public School District No. 1 Board voted to accept students from neighboring Williams County District 8 this fall, provided the two districts resume negotiations to develop a solution to overcrowded conditions at Williston High School.
The Williston No. 1 board previously voted to stop accepting high school students from District 8, which currently has no high school, educating only students in grades K-8. The two districts had been working toward a joint solution but the arrangement, orchestrated by the Williams County Commission, was suspended due to the recent steep decline in oil prices.
The compromise to accept D8 students, proposed in a motion by board member Heather Wheeler, will expire at the end of the 2020-21 school year if the two districts are unable to agree to a solution.
Click
here to listen to Wheeler's comments.
Board President Joanna Baltes and Vice President Tom Kalil voted against the motion, with both arguing that additional information would soon be available to make a more informed decision. Baltes pointed out the District 8 School Board was expecting to receive a report on the costs of dissolution or reorganization at its meeting Monday, which would give the two boards a better idea what options might be available.
Click
here to listen to Baltes' comments.
Williston High School, which opened in 2016, was built to accommodate 1,200 students, but started the 2019-20 school year with 1,290 students.
Click
here to read a Williston Herald article with additional background information about the issue.
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NDDOT Restart Plan is Underway
The North Dakota Department of Transportation has started providing on-site services available by
appointment only at its facilities around the state. Walk-ins are not allowed.
“We're here to serve the citizens of North Dakota, but safety is our top priority,” said Bill Panos, NDDOT director. “Many of our services can be done online, but we have road tests and a few other processes that require in-person service."
For motor vehicle or driver license services call 1-855-633-6835. The NDDOT has also added an online option; click
here to complete an online request for a driver license.
Driver licenses and motor vehicle tabs due March 1, 2020, remain valid until the declared disaster has ended and do not need to be renewed at this time due to the Governor’s Emergency Declaration that waived expiration dates until further notice. Click
here for a listing of the driver license and motor vehicle services currently offered. Many driver license services such as change of address, replacements and renewals are available
online. Vehicle renewals can also be done online, at a self-service kiosk or by mail. Call local Motor Vehicle offices for available services or check NDDOT’s
website.
The Federal Transportation Security Agency has extended the deadline for REAL-ID for a full year until October 1, 2021. Appointments for REAL-ID are not currently being accepted.
Click
here for a KFYR-TV news story on the NDDOT Smart Restart.
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Airline Boardings Plummet to Record Lows
North Dakota’s eight commercial airports in April experienced their lowest monthly passenger count since the state began tracking passenger boarding numbers 40 years ago.
Only about 5,000 passengers flew out of North Dakota’s airports throughout the month of April, a drop of around 95 percent. State aeronautics offcials said the decline was directly attributable to the mitigation impacts COVID-19 has had on the traveling public.
It could hardly be considered good news, but Williston's XWA Airport saw the smallest percentage decline in passenger boardings, "only" dropping 88 percent from one year ago. A total of 808 passengers boarded a flight in Williston in April, compared to 6,876 passengers in April 2019. Minot's decline was similar to the statewide average, with 801 passengers in April compared to 12,743 a year ago. Just 153 people boarded flights in Dickinson last month, compared to 1,808 in April of 2019.
Passenger numbers in North Dakota have slowly begun to rise in May as communities throughout the country begin to re-open. But historically low passenger levels are expected to continue in the near future as long as coronavirus precautions remain in place.
“The safety of all passengers and staff remains a top priority for our commercial service airports,” said Kyle Wanner, Executive Director of the North Dakota Aeronautics Commission. “The airports and airlines have implemented additional sanitizing methods in an effort to take every precaution possible for the safety of the flying public."
Click
here to see a comparison of boarding figures between April 2020 and April in previous years.
Click
here to see a Minot Daily News article about Minot boarding figures. Click
here for a story from the Williston Herald about boarding numbers there.
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WDEA Offering Energy Scholarships
The Western Dakota Energy Association will award five $1,000 scholarships this fall to students in an energy-related field at a North Dakota college, university or technical school.
WDEA President Shannon Holter said the association is offering the scholarships to help the industry and western communities meet the workforce challenges historically experienced with oil industry growth.
“We recognize that North Dakota will see benefits from the oil industry only if it is able to attract the workforce it needs,” said Holter. “We want to do everything we can to encourage young people to explore the many opportunities for a rewarding career in the energy sector.”
Funding for the scholarship program is generated by sponsorships of WDEA’s annual meeting, as well as royalties from advertising in Basin Bits magazine.
Click
here to learn more about the selection criteria and how to apply.
Click
here to view or download an application form.
The application deadline is September 18, 2020. Scholarship winners will be announced at WDEA's annual meeting October 7-8 in Williston.
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NDPC Al Golden Scholarships
Application Process Now Open
The Al Golden Scholarship Program, sponsored by the North Dakota Petroleum Council through its philanthropic foundation, is now accepting applications for the 2020-21 school year.
The program will award up to nine $2,000 scholarships to students pursuing degrees or training in an energy-related field.
Scholarship winners are selected based on academic achievement, work or internship experience in the oil and natural gas industry or a demonstrated commitment to a qualified area of study. Students must be attending a North Dakota college or university and remain a full-time student for the 2020 fall semester and 2021 spring semester.
Applications must be submitted or postmarked by June 1, 2020. For qualifications and application requirements along with a list of previous scholarship award winners,
click here.
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COVID-19 Useful Information Links
Here is a list of useful information resources for addressing both individual and family concerns along with pertinent information for business and employers related to managing the current coronavirus outbreak.
Information at these links is usually updated to be the most current to help focus on facts not fear, and preparation over panic.
North Dakota SMART Re-start
North Dakota Information
U.S. Small Business Administration
Small Business Loans
Center for Disease Control & Prevention
U.S Department of Agriculture
U.S. Department of Housing and Urban Development
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Quick Connect
- DOE to purchase 1M barrels for Strategic Petroleum Reserve -- Sen. Cramer
- Kathy Neset talks about oil demand drop and post-pandemic optimism -- Fargo Forum
- Ethanol plants evaluate changes amid Coal Creek's planned closure -- Bismarck Tribune
- Hearing for Coyote Creek proposal to lease federal coal in Mercer County -- Bismarck Tribune
- Bizarre legal claims filed to nearly $2B of western North Dakota land -- SayAnything Blog
- Parameters set for testimony on hearing declaring production a waste -- Williston Herald
- Dunn County oil services employee charged with theft of $5 million -- Dickinson Press
- Bakken Oil Product and Services Show cancels final anniversary show -- Williston Herald
- Shutting in DAPL would deepen ND's current energy crisis; create uncertainty -- Williston Herald
- ND School Superintendent announces $41.8 million school grant to 20 sites -- KFYR-TV
- Schools delay or get creative to celebrate Class of 2020 graduations -- Associated Press
- DSU's president discusses what in-person classes could look like in the fall -- KXMB-TV
- District 8 offers one-year interim superintendent contract to David Goetz -- Williston Herald
- Burgum's executive order allows 'soft opening' of summer school and other activities -- KFYR-TV
- Gov. Burgum meets with Pres. Trump at the White House to discuss COVID-19 -- KXMB-TV
- Dickinson airport moves to next phase in bidding multi-phase project -- Dickinson Press
- North Dakota State Fair canceled due to concerns surrounding coronavirus -- Bismarck Tribune
- 'Very emotional': State Fair leadership discusses decision to cancel 2020 event -- KFYR-TV
- Medora Musical making plans to reopen this summer amidst pandemic -- Dickinson Press
- COVID-19 resulting in sales surge for rural grocery stores; some even hiring -- KXMB-TV
- McKenzie County gravel road drones take flight to evaluate road conditions -- KFYR-TV
- Port: Coal towns don't want training, they want you to quit destroying jobs -- Dickinson Press
- The United States was energy independent in 2019 for the first time since 1957 -- IER
- Judge rejects challenge to legal ruling that canceled Keystone XL permit -- The Hill
- Anti-pipeline legal rulings are putting thousands of good jobs at risk -- Inside Sources
- Fed's Powell says economy may face 'extended period' of weak growth -- Reuters
- U.S. oil towns could take years to recover from crude price shock -- OilPrice.com
- Joint Statement: Saudi Arabia and Russia committed to oil market stability -- Reuters
- OPEC lowers global oil demand forecast again with production cuts in focus -- S&P Global
- Investors search for bargains in energy sector minefield speculating rebound -- Reuters
- U.S. coal-fired electricity generation in 2019 falls to 42-year low; 16% decrease -- EIA
- Goldman Sachs: Oil demand could exceed supply by the end of May -- OilPrice.com
- U.S. Energy Chief Brouillette forecasts a robust future for oil demand -- World Oil
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Factoid of the Week
A 2.5 megawatt wind turbine with a 40 percent capacity rating would produce 8,760,000 kWh of electricity in a year. If it is eligible for the maximum 2.5 cent per kWh production tax credit, the turbine's owner would receive $219,000 per year from the federal subsidy. Assuming a wind farm contains 40 such turbines, the owner would collect $8.76 million per year on top of electricity sales into the grid.
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May 18
Bismarck
May 18
Bismarck
May 20
Bismarck
May 27
Bismarck
May 28
Bismarck
May 29
Bismarck
June 1
Bismarck
June 2
Bismarck/online
June 2
Bismarck
June 8-11
Bismarck
June 19
Williston
August 20-21
Williston
September 1-3
Bismarck
September 30 - October 1
Bismarck
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Oil prices and rig count
May 15, 2020
WTI Crude: $29.43
Brent Crude: $32.50
Natural Gas: $1.65
North Dakota Active Rigs: 12 (down 7)
5/15/2019 -- 65 rigs
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Geoff Simon
Editor/Executive Director
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