The Dakota Access Pipeline has boosted North Dakota’s tax revenues by $19 million in its first three months of operation, according to an analysis by the North Dakota Pipeline Authority.
Director Justin Kringstad said Tuesday producers have seen a $2 increase in the average price for Bakken crude in June, July and August compared to 2016 figures. He attributes the increase to more competitive transportation costs as a result of Dakota Access going into service in June.
That $2 boost for every barrel equates to more than $6 million in additional oil tax revenue for the state each month, Kringstad said.
His figures are based on current North Dakota oil production, which increased 3.5 percent in August to an average of 1.08 million barrels per day, the North Dakota Department of Mineral Resources reported Tuesday.
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Tax Commissioner Ryan Rauschenberger said the figures he’s seeing in his office are consistent with Kringstad’s estimates.
“It’s helping all the producers and royalty owners regardless of whether those barrels are actually traveling down the Dakota Access Pipeline,” Rauschenberger said. “That has really set the market and made the transportation much more competitive leaving North Dakota.”
If that trend continues, Rauschenberger estimates North Dakota will see a boost in oil tax revenue of $140 million each two-year budget cycle.
That will benefit the entire state, not just oil-producing areas, and pay for priorities, such as water projects, education and the Legacy Fund, he said.
Kringstad indicated he plans to closely monitor the impact of Dakota Access on the oil price and said the impact may go up and down. Dakota Access links Bakken crude to markets in the Gulf Coast through a connecting Energy Transfer Crude Oil Pipeline that originates in Illinois.
“It may take six months or a year for some of the markets to adjust,” Kringstad said.
About 77 percent of oil was transported by pipeline in August, compared with 10 percent that traveled by rail, Kringstad said. About 120,000 barrels per day leaves the state by rail, with the West Coast receiving the bulk of the shipments.
Natural gas production increased about 2.5 percent in August to an average of 1.9 billion cubic feet per day, according to preliminary figures.
Natural gas flaring increased from 12 percent to 14 percent, with Director Lynn Helms attributing the increase to lack of adequate gathering pipelines.
North Dakota now has 14,080 producing oil and gas wells, a new all-time high. An estimated 863 wells were drilled but were waiting on hydraulic fracturing crews at the end of August.
(Reach Amy Dalrymple at 701-250-8267 or Amy.Dalrymple@bismarcktribune.com)