BISMARCK – North Dakota’s top oil regulator says the current slowdown in oil drilling “is not a bust by any stretch of the imagination” but will put a strain on state revenues in the next two years.
Department of Mineral Resources Director Lynn Helms also said low crude prices could prevent the state from reaching its goal of reducing flaring to 10 percent by October 2020 because natural gas processing projects have been suspended as the price of natural gas liquids has followed oil prices down. Eighteen percent of the state’s gas was flared in May.
Oil prices have dropped about 54 percent since October, but Helms told the Legislature’s interim Government Finance Committee that the state is still receiving about 20 drilling permit applications daily, a “fairly rapid” pace.
“And so the industry is dealing with the unpredictable nature of oil prices by making sure they are positioned to flip the switch almost immediately when oil prices say that that’s the thing to do,” he said.
The state Industrial Commission was hearing about 185 to 200 oil and gas well cases per month in October and is now hearing about 100 cases per month, similar to 2009-2010 levels, while permitting numbers are back to 2011-12 numbers, he said.
“This is a slowdown, but it is not a bust by any stretch of the imagination. It’s still going to really strain the revenue forecast, though,” he said.
The state had 74 active drilling rigs Monday, down from 191 in December, but Helms said those still drilling are more efficient than in the past.
Oil tax revenues helped North Dakota close out the 2013-15 biennium that ended June 30 with a $699.7 million balance in the state’s general fund, or about $100 million more than what was projected when the Legislature adjourned in April, according to preliminary figures from Office of Management and Budget Director Pam Sharp. The final balance will be available next month, she said.