Menu

Dropping Oil Prices: Will it End the Boom in North Dakota’s Oil Patch?

Josh Wood and Jonathan Fahey of the Associated Press recently wrote an article explaining how low oil prices may slow down oil production in North Dakota’s Bakken. Below is a summary of their thoughts on this current topic.

Oil has averaged $96 a barrel over the past four years, triggering more drilling, more hiring, and more opportunities in the North Dakota oil patch. Oil prices are dropping from $107 per barrel in June to $78.65 WTI price per barrel as of 11-10-2014, with many believing the lower oil prices will be staying for a while. The drop in oil prices is a threat to North Dakota’s oil production and drilling communities that depend on oil money.

U.S. oil production has gone up by 70 percent since 2008. The high oil prices fueled the North Dakota boom, providing oil companies the profits and investor cash to buy land, pay for drilling rigs and develop new technology. However, with the lower oil prices, investors are less willing to take on risk leaving oil companies with less money to go and drill the next well.

Drilling in fields that are less profitable will stop, in Burke county North Dakota; it takes $81 per barrel to break even, while the price is $28 per barrel in McKenzie County, North Dakota. Communities like Williston are still going strong; however, when drillers start cutting costs drilling communities will eventually feel it.

Economics in the shale oil regions are robust with oil prices between $80 and $75 per barrel and that should not change anytime soon, unless long-term oil prices fall to $65 to $70 per barrel. However, there could be an upside with a slowdown; giving local governments in drilling communities time to catch up with infrastructure and population increases.

Source: iGrow

Recent News

U.S. Ethanol Production Continues to Rebound
5/29/2020

According to EIA data analyzed by the Renewable Fuels Association for the week ending May 22, ethanol production shifted 9.2% higher, or 61,000 barrels per day (b/d), to 724,000 b/d-equivalent to 30.41 million gallons daily and the largest volume since March. However, production remains tempered due to COVID-19 disruptions, coming in 31.5% below the same […]

Using the Forecasting System to Assess the Risk of Head Scab
5/28/2020

The head scab risk tool can be used to assess the risk of head scab and to help guide fungicide application decisions. Here are a few guidelines for using the system and interpret the output: 1.) Go to the website at www.wheatscab.psu.edu. You will see a map of the United States with some states in green, […]

Corn Prices Range-Bound or Down?
5/27/2020

July corn futures prices hovered between $3.15 and $3.25 since late April.  Corn prices continue to stay within a relatively narrow range and that pattern may remain for the next several weeks.  The potential for prices to move out of the range depends on supply issues and, more importantly, the nascent economic recovery. As the […]

Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now