December 29, 2017
Sanford: Oil Price Bump Means More Activity

With the price of oil climbing toward $60/barrel, North Dakota Lt. Gov Brent Sanford says the state can expect to see more drilling activity in 2018.

Sanford, who was interviewed on the radio program Energy Matters this week, said producers will continue to concentrate drilling in the Bakken core, but if prices keep climbing, drilling activity will spread.

Click here to listen to Sanford’s comments. 

Sanford said North Dakota crude is more competitive, thanks to completion of the Dakota Access Pipeline.

Click here to listen to Sanford’s comments.

Sanford said DAPL also deserves some credit for the state’s increase in oil production.

Click here to listen to Sanford’s comments.

One growing concern is availability of processing facilities and pipeline capacity to handle increasing natural gas production. Sanford said the state will need to be vigilant in addressing the issue. 

Click here to listen to Sanford’s comments.

Energy Matters airs every Tuesday from 3:00–5:00 CST on KFYR and KLTC Radio, and is rebroadcast Saturday on WZFG and KTGO Radio. Click here and advance to the 29:30 mark to listen to Sanford’s interview.
Porter: Electric Producers Need Level Playing Field

As the wind energy industry was emerging, North Dakota offered tax incentives to attract development. But with 3,000 megawatts of installed capacity in the state, the chairman of the ND Legislature’s House Energy and Natural Resources Committee believes the industry is now mature and should be expected to compete with other forms of electric generation.

Rep. Todd Porter, R-Mandan, who was interviewed this week on the radio program Energy Matters, said tax incentives previously available to wind developers are no longer appropriate.

Click here to listen to Porter’s comments.

Wind energy producers continue to benefit from the federal production tax credit of 2.4 cents/Kwh, which is being phased out over the next several years. But Porter said wind energy also has an advantage over coal-fired generation because of the way electricity is dispatched by regional transmission organizations, putting wind energy at the front of the line.

Click here to listen to Porter’s comments.

Porter serves on two interim legislative committees that are studying the wind industry. The Natural Resources Committee is looking at impacts of wind development, while the Energy Development and Transmission Committee is studying tax policy.

Click here to listen to the full Energy Matters interview with Rep. Porter. 
State DEQ Shooting for July 2018 Startup

The 2017 North Dakota Legislature passed a bill to establish a separate state Department of Environmental Quality. And while the legislation proposes a July 2019 startup date, officials hope to be ready a year ahead of schedule.

Senate Bill 2327 provides for establishment of the state DEQ from what is now the Environmental Health section of the state Department of Health.

Dave Glatt, director of the Environmental Health unit, said timing of the startup will depend a lot on meetings with Region 8 of the Environmental Protection Agency.

Click here to listen to Glatt’s comments.

Glatt said the state is working with EPA to ensure the state retains authority to administer federal environmental programs such as the Clean Air Act and Clean Water Act. He said the transition to the new DEQ is giving his agency an opportunity to look for ways to improve. Glatt said one of his biggest challenges is recruiting and retaining good employees. 

Click here to listen to Glatt’s comments.

Glatt said his office is also conducting an internal review, asking staff what works and what doesn’t, and also asking stakeholders how they think the agency can improve.

Glatt was interviewed on the radio program Energy Matters. Click here and advance to the 41:40 mark to listen to the full interview.
Expect Record Natural Gas Demand This Winter

U.S. natural gas consumption is expected to reach an all-time high this heating season, exceeding even the memorable “polar vortex” winter of 2013-14, thanks to colder temperatures and increasing pipeline and liquefied natural gas exports.

Not to worry though, rising domestic production combined with sizable storage inventories at the end of the fall refill season are anticipated to easily match the record demand level.

Increases in natural gas demand also are forecast in the power generation sector, primarily driven by growing gas-fired electricity capacity. Also contributing is a projected modest winter-over-winter increase in industrial demand as the result of new industrial projects and capacity expansions now coming on line. Overall, demand is expected to average 7.2 billion cubic feet a day more over the course of this winter than last winter, averaging 96.8 Bcf/d total.

Click here to read more about natural gas price expectations from The American Oil & Gas Reporter.
WTI Ends 2017 Above $60/bbl

Crude oil prices on the WTI index climbed above $60/bbl for the first time in two years on news of declining crude oil inventories and forecasts of growing global demand.

The Energy Information Administration reported that domestic crude supplies fell by 4.6 million barrels for the week ended Dec. 22. Markets had been anticipating a decline of about 3.7 million barrels.

China also issued import quotas for 2018 that traders believe could result in record-high purchases. Oil inventories in China also declined 3% last month, to their lowest level in seven years.

Click here for oil market analysis from Reuters. Click here for EIA's petroleum report.
Legislature Studies Transportation Funding

The ND Legislature's Government Finance Committee is discussing how to fund state and local roads, including the possibility of increasing the state’s gas tax and registration fees, as well as alternative revenue ideas.

Current funding methods are inadequate, according to Terry Traynor, assistant director of the ND Association of Counties.

“Our foundational revenues have not been keeping up with the costs," Traynor told legislators at their Dec. 7 meeting. "It is time to explore other funding options to support our transportation system in the near future and long-term.”

County road funding has consisted of property tax, highway distribution funds, federal highway formula funds, and in recent years, a lot of one-time state funding made possible by oil tax revenue.

Click here to read more from the ND Association of Counties.

Click here to read more about the work of the interim Government Finance Committee.
2,575 Citations During Click it or Ticket Campaign

North Dakota law enforcement agencies issued 2,575 citations during the Click It or Ticket enforcement campaign from Nov. 1 - Dec. 15.

Of the total, 924 were citations for failure to wear a seat belt and 30 were child restraint citations. Tickets for speeding totaled 941. The traffic stops also resulted in 31 drug arrests, nine citations for distracted driving and two DUI arrests.

Failure to use a seat belt is the most significant factor associated with motor vehicle crash injuries and deaths in North Dakota. To date, more than 60 percent of people who died in crashes this year were not wearing their seat belt.
Quick Connect

  • How Bakken investors were conned out of millions -- FBI

  • More eco-terrorist attacks expected in 2018 -- The Hill

  • Callahan: Williston is a great place to call home -- Fargo Forum

Factoid of the Week

From a 42-gallon barrel of oil, U.S. refineries produce 19 to 20 gallons of gasoline, 12 gallons of distillate fuel (mostly diesel) and four gallons of jet fuel. More than a dozen other petroleum products are also produced in refineries. 

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Oil prices and rig count

December 29, 2017

WTI Crude: $60.36
Brent Crude: $66.75
Natural Gas: $2.95

       North Dakota Active Rigs: 49 (down 4)      12/29/16 -- 39 rigs
Geoff Simon
Editor/Executive Director

Mike Kopp, Contributor