April 10, 2020 -- Wish You Were Here
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The windows of St. Mary's Elementary School in Bismarck express a feeling undoubtedly shared by all North Dakota school districts as the virus pandemic shutdown continues.
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GPT Forecast Shared with WDEA Members
City/County Prairie Dog Buckets Unlikely to Fill
The Western Dakota Energy Association hosted a pair of webinars during the past week to provide WDEA members an idea of the impact that the downturn in oil prices will have on Gross Production Tax revenue.
Brent Bogar, WDEA’s “Numbers Guy,” shared various oil price and production scenarios, explaining that lower price and production would reduce incoming GPT revenue up to 50% in some jurisdictions, depending on the duration of the downturn. Bogar said because of the order in which the GPT formula "buckets" fill, it is unlikely the non-oil city and county/township Operation Prairie Dog buckets will fill. The buckets were established by the 2019 Legislature to provide infrastructure dollars to non-oil producing areas of the state.
The state treasurer's office has a
web page that shows the order and current status of the buckets. Revenue is currently flowing into a $200 million bucket earmarked for the state general fund. After it fills, the Lignite Research Fund will receive $10 million before the first GPT dollars will flow into a Prairie Dog bucket that would provide funds to North Dakota cities with more than 1,000 people. Bogar believes that first $30.4 million municipal bucket will fill, but before additional dollars go into other Prairie Dog buckets, the formula provides $400 million to the Strategic Investment and Improvement Fund (SIIF). But based on current oil price and production estimates, Bogar said the SIIF bucket will not completely fill.
The coronavirus pandemic and oil price war are not just affecting oil tax revenues. Bogar said local political subdivisions need to be aware that sales and property tax revenue will also take a hit.
Click
here to listen to Bogar's comments.
Click
here to see YouTube video of the April 3 webinar. Click
here to see the April 9 webinar.
Click
here to see a series of charts prepared by the State Treasurer's office that explain how oil and gas extraction and production taxes are distributed.
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Hoeven, Cramer, Work on Oil Price Issue
Succumbing to relentless pressure from the United States and other oil-producing countries, Russia and Saudi Arabia announced an agreement this week to reduce oil production in an effort to prop up oil prices that have nosedived because of the coronavirus pandemic.
The Russians, Saudis and other OPEC nations agreed to a deal ending an oil war which saw prices drop by more than 50% from January highs. The sides agreed to reduce their crude oil production by 10 million barrels per day effective May 1. They would hold at that level for two months, then reduce the cut to 8 million barrels a day the remainder of the year.
North Dakota's two US Senators have been among the prominent voices pushing for a deal. Senator Kevin Cramer, appearing on CNBC's Squawk Box, said he has been playing "bad cop" with Saudi Arabia, demanding that U.S. military forces that are protecting Saudi assets be withdrawn from the country.
Click
here to listen to Cramer's comments.
John Hoeven, in an appearance on Fox Business News, said in addition to Russia and OPEC nations, he's been reaching out to other nations to reduce the over supply of crude.
Click
here to listen to Hoeven's comments.
Industry analysts believe the production cuts agreed to by the Russians and Saudis are not enough to align supply with demand. The International Energy Agency has reported that global demand for crude oil is off about 30 percent, which amounts to 30 million barrels per day.
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State Expects More Oil Well Shutdowns
With the downturn in oil prices, the state Board of University and School Lands was advised this week that the state's oil industry is considering whether to temporarily shut down production on some state leases.
Anecdotal reports indicate hundreds of oil wells have already been shut down, perhaps amounting to 175,000 barrels or more of daily production. But with up to a 30% reduction in oil demand, refineries are scaling back their operations and available storage is beginning to fill up, so additional shut downs are inevitable. Land Board members were informed the department will exercise a policy that permits the temporary shut-in of petroleum and natural gas production on lands under its jurisdiction.
The Land Department holds lease positions on about 7,500 producing wells, which is about half the statewide total. The department is charged with maximizing revenues from state lands, so has a policy designed to work with the industry to ensure wells are not permanently abandoned due to the current downturn in prices for crude oil and natural gas.
As a result of the pandemic, the department also cancelled an oil and gas lease auction, rescheduling the new nomination deadline for June 19 for the August 4, 2020 minerals auction. Also cancelled were all surface lease auctions scheduled for March 23-27 for 141 tracts in 30 counties.
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Impact Grants Awarded to Rural Fire/Ambulance
The state Board of University and School Lands awarded energy impact grants totaling $1.2 million to nine rural fire and ambulance departments in western North Dakota.
The board also approved five pledge awards for the 2021 fiscal year to allow the recipients to plan work for the coming year. The 2019 Legislature appropriated $2 million for the energy impact grant program, but specified that no more than 60 percent of the grant funds be awarded in a fiscal year.
There was a huge amount of interest in the grants, according to Land Commissioner Jodi Smith, who said the department received 60 applications adding up to $15.5 million. The applications were reviewed by a grant advisory committee, which developed recommendations approved by the Land Board:
- Billings Co. Rural Fire Protection District - $184,529
- Billings County ambulance replacement - $120,000
- Bowman County Rural Ambulance District four-wheel drive ambulance - $50,000
- City of Belfield ambulance replacement - $100,000
- Columbus Rural Fire District firefighting equipment - $141,589
- Gladstone Consolidated Fire District pumper truck - $187,500
- Noonan Fire Department pumper apparatus - $28,000
- Tolley Fire Department building addition - $355,172
- Zap Rural Fire Protection District extrication equipment - $33,210
The pledge awards to be distributed in 2021 will also amount to $1.2 million, which includes $400,000 from cancelled grants. The grant awards will be issued to:
- City of New England street and sewer improvements - $348,650
- City of Stanley wastewater treatment upgrades - $210,000
- Mountrail County 36th St NW stabilization and gravel - $41,350
- Williston Public School District #1 innovation academy - $250,000
- Williston Township 52nd Street landslide - $350,000
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Bakken Should Recover Fast from Downturn
Because they've already been through one downturn in oil prices a few years ago, Bakken oil producers should be able to bounce back more quickly when the current low price situation is resolved.
That's the opinion of David Flynn, Professor of Economics and Finance at the University of North Dakota. Flynn said the previous low-price environment caused many of the more marginal players to fail, leaving behind a stronger industry today.
Click
here to listen to Flynn's comments.
Flynn said there have been several hundred oil industry related unemployment claims, but so far there have not been massive layoffs in the industry. He said that suggests that North Dakota oil producers will be prepared to get back to work when crude oil prices become more stable.
Click
here to listen to Flynn's comments.
Flynn made his comments during an interview with Scott Hennen on the radio program,
Energy Matters. Click
here and advance to the 1:10 mark to listen to the full interview.
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Coal Miners Deemed Essential Workers
The Department of Homeland Security recently updated its guidance to include coal mining, processing and shipping on the list of essential and critical personnel.
With the designation, coal miners are deemed to be of utmost importance to the nation’s critical infrastructure workforce.
DHS compiled an advisory list of essential infrastructure workers to ensure the continuation of functions critical to public health and safety as well as economic and national security. While the workers at electric generation and transmission facilities were already included in the list of essential and critical personnel, workers at the nation’s coal mines were not initially listed.
Noting that the employees of the nation’s coal mines are vital to keeping the nation’s baseload power plants running, the Lignite Energy Council and Wyoming Mining Association sent letters to the DHS asking that mineworkers be included.
“At this time, as our nation is looking at the coronavirus crisis as a national security issue, the 24/7 generation from North Dakota’s seven coal-based power plants is power we can count on to keep critical and essential businesses, such as clinics and hospitals and other essential industries, running smoothly,” LEC President and CEO Jason Bohrer said in the letter.
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Second Coronavirus Death in Stark County
A second Stark County man has been identified as the state's sixth victim of the COVID-19 pandemic, and a seventh victim, a woman in her 60s, has also died, but her residence has not yet been revealed.
The state's fifth victim was also a man from Stark County. One man was in his 60s and the other man in his 70s, both of whom had underlying health conditions.
Gov. Doug Burgum announced the deaths at his daily media briefing on the state's response to the deadly virus. He said the state currently has 167 active cases of the virus, with 13 of those individuals hospitalized. A total of 105 North Dakotans are considered to have recovered from the virus.
Burgum said hospitals are well prepared to handle a surge of infections, which has yet to materialize.
Click
here to listen to Burgum's comments.
Nine more positive cases were reported statewide today, including two in Burleigh County, five in Cass County, one in Dunn County and the first case in Sargent County. Cass County has the most infections with 88 cases, Burleigh County is next with 48, and Morton County has 19.
Click
here to read a Dickinson Press article about Ralph Muecke, who died from the virus.
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Southwest ND Pilot Turns Up Six Positive Tests
More than 700 people were tested for the coronavirus at sites in Amidon and Gladstone last weekend, with six of those tests coming back positive for the virus.
Gov. Burgum characterized it as a surveillance effort to find out how many people may have the virus, but don't know it because they are not experiencing any symptoms. Among the six who tested positive, three people had not shown any symptoms.
The pilot program alerted the state to the potential for a serious case of COVID-19. Burgum said one of the individuals who tested positive had been in close contact with someone who would be considered to have underlying health conditions.
Click
here for a Williston Herald article about the state response to identifying asymptomatic citizens.
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North Dakota Launches Care19 App to Combat COVID-19
Gov. Doug Burgum and the ND Department of Health, in partnership with ProudCrowd, creators of the popular Bison Tracker app, launched a free mobile app this week to help slow the spread of COVID-19 in the state.
The app, called Care19, will help reduce the spread of COVID-19 by more effectively identifying individuals who may have had contact with people who've tested positive. Once the app is downloaded, individuals will be given a random ID number and the app will anonymously track the individual’s location throughout the day. Individuals are then encouraged to categorize their movement into different groups such as work or grocery. The app will only store the location of any place a person visits for 10 minutes or more. The ID number of each individual contains no personal information besides location data.
If an individual tests positive for COVID-19, they will be given the opportunity to consent to provide their information to the NDDoH to help in tracing and forecasting the pandemic’s progression with accurate, real-time data.
“Our goal is for at least 50,000 North Dakotans to download the app," said Burgum. "The aggregated information this app is gathering can save lives. Embracing this technology is one more way we can show that we’re all in this together.”
The first roll-out of the app is now available at the Apple App store and coming soon for Android users.
Click
here for more information about the Care19 app on the NDDoH website.
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Under Construction: ND 1804 East of Williston
Starting Monday, traffic will be impacted on sections of ND 1804 east of Williston. The work begins at Williams County Road 42 and extends 1.25 miles east of Lunds Landing. The project will feature a complete reconstruction of the highway and includes passing and turning lanes.
The two-year project will be constructed in five segments varying in length from one to four miles. During portions of the construction, traffic will be re-routed to a temporary road alongside ND 1804.
The NDDOT would like to remind motorists to slow down and use caution throughout the work zone. For more information about construction projects and road conditions throughout North Dakota, call 511 from any type of phone or visit the
Travel Information Map on the NDDOT
website.
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Workshop: The 3 P's of Gravel Quality
Event is Being Rescheduled
The North Dakota Local Technical Assistance Program of the Upper Great Plains Transportation Institute is offering training designed for anyone who works with gravel or gravel roads including motor grader operators, county road superintendents, county and township officers, contractors and gravel suppliers.
Among the many topics to be discussed by the instructors include identifying what is good gravel, how to balance gravel quality with local resources, solving gravel deficiencies, prospecting tips, a review of production practices and enhancing gravel quality.
Watch the
website for updates regarding the new schedule for the event. Click
here for the training description and registration.
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Write it Down on Your Calendar!
WDEA 2020 Annual Meeting
Get this date on your calendar! The Annual Meeting of the Western Dakota Energy Association will be held:
October 7-8, 2020
The Grand Williston Hotel & Conference Center
Williston, ND
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Quick Connect
- ND oil production slumps from coronavirus crisis and price war -- Fargo Forum
- Marathon Oil cuts spending for the second time in a month on oil price rout -- Reuters
- Exxon, Liberty announce capex cuts, Liberty will lay off 204 in Bakken -- Williston Herald
- Bakken natural gas helps power the ongoing search for coronavirus drugs -- Bismarck Tribune
- ND has second company interested in building slurry well for TENORM waste -- Williston Herald
- Continental Resources suspends dividend, to cut production by about 30% -- MarketWatch
- Legislation: $3 billion in funding to fill strategic petroleum reserve with oil -- Williston Herald
- With oil production boost, ND population growth was among top 10 in 2010s -- Fargo Forum
- COVID-19 help for hospitality workers in the oil patch from ONEOK -- Williston Herald
- North Dakota candidates set for June 9 primary after filing deadline passes -- Bismarck Tribune
- Countywide study in Williams county digs into public school finances -- Williston Herald
- Opposing petitions show North Dakotans differ on shelter-in-place issue -- KFYR-TV
- Gov. Burgum defends decision for not issuing a stay-at-home order -- Associated Press
- Burgum envisions rapid testing as new normal when society returns to work -- Williston Herald
- COVID-19 recovery: How does it work? When can you tell if you have recovered? -- KFYR-TV
- ND First Lady urges those in need to utilize behavioral health resources -- KXMB-TV
- COVID-19 taking financial toll on Minot’s City Council's projected revenue flow -- KFYR-TV
- Revenue prompts Minot City Council to postpone fire station, retaining wall -- Minot Daily News
- Goehring: Non-essential ag activities, events should be canceled or postponed -- KXMB-TV
- U-Mary embraces a new mission: a field hospital for coronavirus patients -- Bismarck Tribune
- Planning continues for Medora musical amid coronavirus pandemic -- Dickinson Press
- New campaign to give people something to do during social distancing at home -- KXMB-TV
- Ben Vig, former ND lawmaker, joins Democratic-NPL gubernatorial ticket -- Bismarck Tribune
- Iraq oil minister says new oil deal needs support from key producers outside OPEC -- Reuters
- Oil industry responds to pandemic with charitable and community assistance -- Energy In Depth
- Hospitals need reliable source of electric energy to keep coronavirus patients alive -- IER
- Limbo dance of prices from COVID-19 may send average to $1.30 per gallon -- Business Insider
- The U.S. cannot afford to let shale oil play fail with price and demand pressure -- OilPrice.com
- Equinor makes oil discovery in the U.S. Gulf of Mexico but more exploration needed -- Reuters
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Factoid of the Week
As the world struggles with COVID-19, finding useful information to help businesses and communities can be challenging. The ND Department of Commerce has consolidated resources on a single site for important state and federal information to assist individuals and businesses mitigate the economic impacts.
Click
here
for state and federal financial, labor, insurance, tax, and safety information including SBA Disaster Loans.
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April 28-30
Casselton, Granville and Dickinson
April 28-30
Watford City
April 30
Bismarck
May 8
Online - Bismarck
May 14
Bismarck
May 19
Bismarck
June 1
Bismarck
June 2
Bismarck
June 8-11
Bismarck
June 19
Williston
September 1-3
Bismarck
September 30 - October 1
Bismarck
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Oil prices and rig count
April 10, 2020
WTI Crude: $22.76
Brent Crude: $31.48
Natural Gas: $1.73
North Dakota Active Rigs: 36 (down 8)
4/10/
2019
-- 62 rigs
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Geoff Simon
Editor/Executive Director
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