October 16, 2020 -- Say Cheese!

More oil wells that were shut in earlier this year were brought back on-line in August, pushing the state of North Dakota's daily average production up to 1.164 million barrels per day.

Lynn Helms, director of the Department of Mineral Resources, said the state will likely see another slight increase when September numbers come in, but he expects production will flatten in October, and November "could start a downward trend." Helms said with crude prices continuing to hover around $40/bbl, there is no financial incentive for producers to drill new wells.

Click here to listen to Helms' comments.

Helms said there is a possibility that production levels could be sustained if a proposal to repurpose CARES Act dollars to create an incentive to complete some of the more than 800 drilled but uncompleted wells (DUCs) in the Bakken. He said with winter setting in, the state will not be able to complete reclamation work on abandoned wells that are being plugged by the end-of-the-year deadline. But rather than leave $16 million on the table, Helms proposed using the money instead to create an incentive for producers to finish about 80 DUC wells. He said the idea came out of a brainstorming session with the Bakken Restart Task Force.

Click here to listen to Helms comments.

Helms said hydraulic fracturing companies have indicated the completion incentive could create 500 to 1,000 jobs. The proposal must first be approved the Emergency Commission which meets October 23, and final approval would come from the legislature's Budget Section when it meets October 28.

Helms said there has been a recent uptick in drilling activity, but he said it is driven solely by producer fears that a future Joe Biden administration would not issue new drilling permits on public land, which would include areas managed by the Bureau of Land Management on the Ft. Berthold Reservation.

Click here to listen to Helms' comments.

One bright spot in the report is that the industry continues to meet the state's natural gas capture goals. Producers captured 92 percent of the produced gas in August, which exceeds the 91 percent target scheduled to take effect on November 1.

Click here to read Helms' Director's Cut.

Promising New Treatments for Coronavirus Will Help

Crude oil prices are not likely to climb until global oil demand gets closer to its previous levels, but with more effective treatments of COVID-19, that demand resurgence may come fairly soon.

Eugene Graner, Commodity Trading Adviser with Heartland Investor Capital Management Inc., said recent surges in price are mostly driven by hurricanes in the Gulf of Mexico that temporarily shut down production. But when supply is returned, prices drop back again. Graner, who was interviewed this week on the radio program Energy Matters, said he doesn't expect oil prices to rise much until demand is closer to its pre-pandemic total of 100 million barrels per day.

Click here to listen to Graner's comments.

Graner said crude prices may improve soon because health officials are making great progress in development of successful treatments for the coronavirus. Graner, who had the virus himself and has recovered, said contrary to media reports, highly effective treatments are available.

Click here to listen to Graner's comments.

Graner said he expects oil prices will climb back to $50/bbl in 2021, but may stagnate from there. Click here and advance to the 31:07 mark to listen to the full Energy Matters interview with Graner.

Officials with Midwest AgEnergy based in Underwood held a public ceremony this week to mark the start of drilling a stratigraphic test well to study the feasibility of underground storage of carbon dioxide. The company also kicked off a larger initiative called Vision Carbon ZERO, a multi-phased approach to reducing its carbon dioxide emissions to zero. 

Several statewide elected officials spoke at the ceremony including Senator John Hoeven, Lt. Governor Brent Sanford, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring.

Midwest AgEnergy CEO Jeff Zueger said previous seismic testing done on the site indicates that CO2 storage is feasible, and the test well should provide further evidence that it will work.

Click here to listen to Zueger's comments.

The ethanol plant is powered by heat from the adjacent Coal Creek Station. Each year Blue Flint produces more than 200,000 tons of CO2, which is subsequently scrubbed and released into the atmosphere. Carbon ZERO will remove the byproduct of CO2 from the plant, compress it and store it safely underground in a suitable geologic formation.

The project is supported by a nearly $3.4 million matching grant from the ND Industrial Commission through the Lignite Research Council. Zueger said Blue Flint would ultimately invest about $35 million to launch the CO2 sequestration project if the test well proves successful.

Click here to read an article about the ceremony from KFYR-TV.

The final hurdle has been cleared by Energy Transfer Partners to expand its 570,000 barrels/day Dakota Access Pipeline to move up to 1.1 million barrels per day of North Dakota crude to a terminal in Illinois.

The Illinois Commerce Commission issued its final approval for the project this week, stating that the expansion would promote energy security and convenience for the general public. Energy Transfer officials indicated they expect to complete the work by the third quarter of 2021. The company earlier this month began work on a new pumping station in Emmons County.

The work is occurring despite ongoing litigation in the DC District Court attempting to force Dakota Access to shut down the pipeline while its environmental permitting is reviewed. This summer, U.S. District Judge James Boasberg shocked the state with an order nullifying an easement for the pipeline to cross the Missouri River granted by the Corps of Engineers. The judge said the environmental assessment of the project was inadequate and instead ordered that a full environmental impact statement be completed, despite the fact the pipeline has been operating successfully more than three years.The Corps heard initial comments on the EIS during a three-hour Facebook livestream last night.

The DAPL optimization project will accommodate increased volumes by adding horsepower along the existing line. The additional horsepower will be created by adding pumps at new and existing pump stations. The work in Emmons County will require between $30 and $40 million in upgrades.

The work approved in Illinois will permit installation of a new pump station in Hancock County, near the City of Carthage, with pumps installed totaling up to 30,000 horsepower. Dakota Access will also add two new 6,000 HP pumps to replace two existing pumps at the Patoka, IL terminal, where the Dakota Access pipeline terminates; as well as a new pump station on the pipeline in Massac County, Illinois, near the Village of Joppa, with pumping capacity up to 18,000 HP.

Click here to read the order issued by the Illinois Commerce Commission. Click here to read more about the Corps of Engineers' scope of work and comment process. Click here to view last night's Corps' Facebook livestream. Click here to read an article in the Dickinson Press about the livestream.

Video recordings of speakers who presented last week at the virtual annual meeting of the Western Dakota Energy Association have been posted on WDEA's YouTube page.

The meeting was conducted on the Zoom platform with a dozen informative presentations spread over two days. Slide presentations from the speakers have also been posted at this link on the WDEA website. Click a link below to view a YouTube video presentation:

Janet Sanford - Treasurer's Report

Ryan Rauschenberger - Revenue Outlook

Brent Bogar - Local Revenue Outlook

Sen. Don Schaible and Steve Holen - Education Funding

Sen. Rich Wardner - Legislative Preview

Brent Bogar - Statewide Oil Tax Spending

John Weeda - Electric Markets

Lynn Helms - Oil Industry Outlook

Janet Sanford - LoadPass Update

Alan Dybing and Tim Horner - Road Needs

Matt Johnson - Western Liaison 

Curt Glasoe - Wise Roads Project

Jonathan Rosencrans - Wise Roads Next Phase

North Dakota’s eight commercial service airports posted a total of 39,451 passenger boardings during the month of September, which is only 44 percent of the figure posted in the same month last year.

There's both good news and bad news in the passenger numbers. The September total represents the highest monthly recovery rate North Dakota has experienced since the beginning of the COVID-19 pandemic. But it is also the first month since April that the state experienced a lower passenger volume than the previous month, with 4,000 fewer passengers in September than in August.

“September is seasonally one of our slowest months for air travel in the state of North Dakota and so as

expected, we experienced a small dip in passenger volume from August,” said Kyle Wanner, Executive

Director of the ND Aeronautics Commission. “Our commercial service airports have now been

successfully operating during the COVID-19 pandemic for seven months and during that time they have

worked hard to ensure that a safe environment exists for the traveling public."

Minot had the best showing among the eight commercial airports coming in at about 55% of last year's boardings. Minot boarded 6,800 passengers in September, compared to about 12,500 one year ago.

Click here to see September boarding figures from the eight airports.

With the last legal hurdle cleared, Meridian Energy – the owner and operator of the Davis Refinery to be built near Belfield – is set to resume on-site work in the spring of 2021. In an announcement this week, Meridian reported the company will resume on-site work "in coordination with the development of its engineering and design.”

In mid-September, the ND Supreme Court ruled in Meridian’s favor in the final litigation matter regarding the permitting for construction of the Davis Refinery. The court affirmed a lower court ruling upholding the refusal of the ND Public Service Commission to assert jurisdiction over the suitability of the project’s site.

The court’s decision comes on the heels of its June 30 affirmation of the issuance of the air quality permit by the ND Department of Environmental Quality in 2018. All of these actions pave the way for Meridian to complete engineering, procurement and financing for the Davis project.

In a news release issued on September 16 following the Supreme Court decision, William Prentice, chairman and CEO of Meridian Energy said, “The Davis project comes at a critical time for North Dakota, when both the jobs that will be created by Davis and the market that Davis provides to Bakken oil are particularly important. The refinery will employ several hundred workers during construction, with permanent employment of up to 200 jobs. The overall impact of direct, indirect, and derived jobs in the area could be well over 2,000. In addition, Davis will almost triple the tax base of Billings County, enabling badly-needed community and infrastructure development to proceed and allows North Dakota shale oil producers to have their product refined locally and avoid costly transportation to out-of-state refineries.”

Competitive grants are now available to K-12 school districts for developing and improving the availability of distance learning techniques and technologies.

The Governor’s Emergency Education Relief (GEER) Fund, created by the CARES Act, allows the governor to provide financial support. In collaboration with the state Department of Public Instruction, Governor Burgum's office has released a competitive grant program to inspire innovative practices for providing educational opportunities and meeting local needs. North Dakota received $5.93 million in GEER funding from the U.S. Dept. of Education, $2.48 million of which is available through the K-12 competitive process.

“This grant opportunity allows school districts to seek reimbursement for investments made to improve education delivery and support services to students and families across North Dakota,” Burgum said.

All education-related entities are eligible to apply for the GEER grants. Grantees may receive up to $200,000 each based on their application. Click here for additional information or to download the online application, which is due no later than October 23.

A statewide campaign against underage drinking begins this week with law enforcement across the state conducting compliance checks and shoulder taps. The enhanced enforcement effort is part of the Drive Sober or Get Pulled Over campaign that runs from October 16 to November 15.

Drinking alcohol under the age of 21 is illegal. Underage persons found to be consuming or in possession of alcohol could face fines and end up in court. No matter the age, driving under the influence of alcohol is not only illegal, but dangerous.

“Young drivers might not yet understand the personal responsibility that comes with driving. We want them to know drinking and driving is always dangerous, and drinking underage is illegal,” said McKenzie County Sheriff Matt Johansen. “Enforcement campaigns like Drive Sober or Get Pulled Over give law enforcement the tools to reinforce the message to youth to always drive sober.”

Alcohol and drug-related crashes and arrests are 100% preventable. Many lives would be saved in North Dakota each year if every driver consistently makes the choice to always drive sober, designate a sober driver or use a ride-hailing service.

Law enforcement agencies across the state worked overtime in September focusing on distracted driving in a campaign named U Drive. U Text. U Pay.

A total of 557 citations were attributed to the added patrols. Of the total citations, 296 were issued for distracted driving, 50 for other traffic citations (i.e. disobeying traffic signals, equipment violations), 80 citations for speeding, 24 citations for suspended/revoked license, 15 citations for being an uninsured motorist, three drug-related arrests and 20 citations for not wearing a seat belt.

Although distracted driving takes on many forms, texting is one of the most common. Texting while driving is a behavior so dangerous that drivers are 23 times more at risk of a crash or near-crash event. Text messaging is prohibited for all drivers in North Dakota.

For a KFYR-TV story on this campaign, click here.

Both campaigns -- Drive Sober or Get Pulled Over and U Drive. U Text. U Pay are part of the Vision Zero strategy to eliminate motor vehicle crash fatalities and serious injuries on North Dakota roads.

Source: U.S. Department of Energy