August 16, 2019

Oil and Natural Gas Set Records in June

Gas Flaring Rises Due to System Outages

It was a good news, bad news scenario in this month's "Director's Cut" from the Department of Mineral Resources. 

The good news is the oil and gas industry is back to breaking production records. The number of producing wells is also at an all-time high and activity is above the estimates used in North Dakota’s revenue forecasting model. That is all great news for the state treasury and the state's taxpayers.

Click here to listen to production comments from Lynn Helms.  

The bad news comes from abnormally high flaring levels in June due to several key infrastructure systems that where down. They included the Alliance pipeline with scheduled maintenance that, according to Helms, stretched out twice as long as originally planned.  

Click here for Helms’ comments on gas flaring.  

June production totaled 42,739,555 barrels, or 1,424,625,284 bbl/day. According to Helms, oil production for the month could have been about 50,000 barrels higher, but most operators implemented some level of production limitations due to the infrastructure outages.

Click here to listen to Helms' comments.

There are a number of operators potentially facing production restrictions from DMR due to excessive flaring but Helms thinks force majeure provisions (unforeseeable circumstances) will come into play.

Click here for Helms' comments. 

Helms said he expects July gas capture rates to be better than June. He said new gas capture and processing infrastructure is expected to come on line this fall, which should bring producers back into compliance with the capture target. 

Regarding pricing, Helms said the markets had a case of the “jitters” over the China sanctions and activities regarding Iran. “It’s making it difficult for the E & P operators to raise capital so the stock market is not investing capital into the publicly-owned companies and the ones who are looking for private venture capital are finding it hard to interest investors in exploration and production,” Helms said. 

Click here to listen to Helms' comments on pricing. 

Click here to read the full Director's Cut.

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Helms Talks About Petrochemical Plant for North Dakota 

Lynn Helms was part of the state delegation to tour petrochemical facilities last week in Alberta. During the monthly production news conference he was asked about his view of the possibilities of such investments in North Dakota. 

He said he would put the odds at “50-50” saying that he’s encouraged since they know of at least three companies interested in locating in the state.  

Click here for his comments.  

See last week’s WDEA newsletter for a story on the state delegation's visit to Canada.  

Oilfield Electric Demand to Jump 71%

Growth in North Dakota oil production means the state will also need to generate a lot more electricity in the coming years. Members of the legislature's interim Energy Development and Transmission Committee were told this week that demand is projected to increase 71 percent in the next 20 years.

John Weeda, the director of the North Dakota Transmission Authority, said the growth is among the highest in the nation. But Weeda, who spent 40 years working for Great River Energy, said the state's utilities are well positioned to handle it.

Click here to listen to Weeda's comments.

Weeda said the growth could be even stronger if the state attracts downstream industries such as a petrochemical manufacturer. He said additional electric transmission infrastructure will also be required in the coming years, particularly to accommodate the expansion of the state's wind industry. Weeda noted that one planned wind farm was recently scaled back from 300 megawatts to 200 MW because there was not adequate capacity in the transmission network to handle the additional current.

Weeda said the Transmission Authority's annual report will be released at the August 28 meeting of the Industrial Commission. He said it will highlight the need for additional transmission build-out to serve load in the Bakken, and will describe potential benefits of using direct current (DC) transmission to move renewable energy to distant markets. Weeda told legislators that just over half of the electricity generated in North Dakota last year was exported to neighboring states.

Click here to see Weeda's slide presentation.

Legislators Discuss Legacy Earnings

An interim legislative committee plans a series of meetings around the state over the coming year to gather public input on the use of earnings from the state's Legacy Fund.

The constitutional fund was approved by the state's voters in 2010. It receives 30 percent of all oil tax revenue collected in the state, which at present price and production amounts to more than $600 million per year. The fund's current balance is $6.2 billion and earnings the past biennium totaled $455 million.

There's been no shortage of suggested uses for the money, but so far it's been used to patch holes in the last two state budgets. Several bills were pitched in the 2019 Legislature that would have used Legacy earnings. They included an infrastructure revolving loan fund, a school construction revolving loan fund, and Governor Burgum proposed using $50 million in earnings to fund construction of the Theodore Roosevelt Presidential Library, but none of those bills passed.

House Majority Leader Chet Pollert, who chairs the committee, said it's too early to say if the group will come up with specific policy proposals that would be considered by the 2021 Legislature.

Senate Majority Leader Rich Wardner said he believes it's important that the committee provide some direction regarding use of the earnings. Wardner said there's been talk of ballot measures that would spend the earnings, and if legislators don't act, voters might approve whatever's put before them.

Click here to listen to Wardner's comments.

Chairman Pollert said there would be at least four more meetings of the committee, one of which would be in the east and one in the west. Senator Ray Holmberg said it would be a good idea if the meetings were not confined to 9:00 to 4:00.

"We might want to consider having an evening session where the average citizen who might be working during the day could have an opportunity to, maybe not testify but to come and listen to what other people have to say," Holmberg said.

Pollert said the next meeting of the committee would likely be scheduled in November.

Click here to read a background memo on the Legacy Fund earnings study. Click here to see slides from an earnings update presentation by the State Investment Office. Click here to read a Bismarck Tribune article about the meeting. 

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State Ended Fiscal Year with $612 Million Balance

Members of the ND Legislature's Revenue Advisory Committee learned the state ended its fiscal year June 30 with a $612 million balance in the general fund.

Joe Morrissette, director of the Office of Management and Budget, said $65 million of the balance can remain in the general fund. The remainder, more than $546 million, will be transferred to the state Budget Stabilization Fund. That amount far exceeds the legislature's earlier estimate that the "rainy day fund" would receive $285 million.

Morrissette said when the amount is added to the $114 million already in the Budget Stabilization Fund , it totals $660 million which is approaching the maximum amount allowed by law. The rainy day bucket is capped at 15% of general fund appropriations, which he said would be $726 million. Morrissette said the 2019 Legislature authorized $75 million to be transferred into the fund from state oil tax revenue this biennium, so he expects the fund will fill to capacity early next year.

Click here to see Morrissette's slide presentation.

Wyoming Man Appointed NDDOT Director

Gov. Doug Burgum today appointed William Panos, the former director of Wyoming's Department of Transportation, to lead North Dakota's DOT.

In announcing the selection, Burgum cited Panos' extensive leadership experience and history of managing major infrastructure projects and large organizations. Panos was Wyoming’s DOT director from 2015-19 under Gov. Matt Mead. He has previous construction management experience with the city of West Sacramento, Calif., and the state of Washington.  

“Bill Panos brings a wealth of experience as a transformational leader for large-scale organizations, with a career spanning city, state, university and private-sector roles,” Burgum said. “Under his guidance, the NDDOT will continue to embrace innovation, enhance services and provide smart, efficient infrastructure for the traveling public."

Panos will assume his duties with the NDDOT by October 21. The department has 982 employees and a biennial budget of $1.4 billion to build and maintain the state's 8,622 miles of roadway and 1,722 bridges.

Williston Area Schools Meet

Governor Urges Collaboration

The overcrowded hallways and portable classrooms in Williston schools aren't just the community's problem, the entire state should be concerned about it.

That's the assessment of Governor Doug Burgum, who facilitated a meeting Monday of all six Williams County school districts. Burgum said a quality education system and good schools are crucial to the state's effort to attract new workers and recruit new business to invest in the state.

School board members, administrators, legislators and local elected officials filled the meeting space at Mountrail-Williams Electric Cooperative. The two largest districts - Williston No. 1 and Williams County No. 8 - have both seen bond issues to build news schools defeated this year. Gov. Burgum's message to all the districts was to seek ways to share resources and collaborate to develop solutions to the need for additional classroom space.

Much of the discussion centered around the possibility of pooling financial resources on buildings that could be shared by two or more school districts. Additional meetings are likely in the future.

Click here to read the Williston's Herald's coverage of the meeting. Click here to see a replay of Facebook Live video recorded by Thomas Simon.

Educators Discuss Innovation at Summit

More than 500 people attended the North Dakota Innovation in Education Summit held this week in Jamestown, including teachers, administrators, legislators, behavioral health professionals, parents and students.

In opening remarks to the conference, Gov. Doug Burgum said North Dakota continues to make progress in implementing and sharing innovative education practices. The 2017 Legislature enacted SB 2186 that encouraged schools to try new ideas that improve the delivery of education, improve academic success and increase educational opportunities. Burgum said the summit provides a forum for teachers and administrators to share those ideas with others.

Click here to listen to Burgum's comments.

InnovativeND Awards were presented during the summit to recognize outstanding work being done by educators to prepare students for success in a global economy. Among the recipients was Natasha Willardson, a junior at Williston Public Schools, who received the Student Leadership Award for her work in STEM education including robotics and programming, and for her leadership in her school’s Girls Go Cyberstart team during the national competition.

New Town Middle School Principal Kara Four Bear and her team were recognized with the Building Leadership Award for integrating technology and engaging their community, including a National Integrated Cyber Education Research Center curriculum.

Behavioral Health a Growing Concern

Thoughts of Suicide Increase Among Youth

The second day of the education summit held this week in Jamestown focused on behavioral health in an educational setting. 

Attendees heard from a number of experts on the topic, including Pam Sagness, director of the Behavioral Health Division of the Department of Human Services. She said statistically, mental health and substance abuse disorders will soon surpass all physical diseases as the major cause of disability worldwide.

Speaking at a recent meeting of the ND Legislature's interim Education Policy Committee, Sagness said among adults, the major problem in North Dakota is binge drinking. She said alcohol is the leading cause of death in the state among people whose death is related to substance abuse.

Sagness said a survey of North Dakota high school students shows an increase among those who say they experienced feeling lost or hopeless. Even more concerning, she said those who say they have contemplated or attempted suicide is also increasing. The survey showed 19% of middle school students seriously thought about killing themselves in their lifetime and 6.3% attempted it. Among high school students, 16.7% said they'd thought about suicide and 13.5% attempted it.

But there is some good news. Sagness said the incidence of alcohol use among North Dakota youth has gone down considerably in recent years.

Click here to listen to Sagness' comments.

Sagness said the earlier young people drink, the more likely they are to have a future addiction problem. She said those who drink before age 15 are four times more likely to have a substance use disorder than those who don't drink until adulthood.

Sagness said addressing the problem starts with investments in prevention and early intervention. She said part of that involves changing public perception about alcohol use, noting results of a survey of North Dakota 18-to-29 year-olds showed they didn't have their facts straight.

Click here to listen to Sagness' comments.

Sagness said North Dakota needs to ensure citizens have timely access to behavioral health services ("a six-week waiting list is not okay"), and needs to expand outpatient and community-based services. 

Registration Open for WDEA Annual Meeting

Sponsorship/Exhibitor Opportunities Available

Registration is now open for the annual meeting of the Western Dakota Energy Association to be held October 30-31 at the Grand Hotel in Minot.

Sponsorships and exhibit space are available to companies or organizations interested in supporting the communities in the energy-producing region of western North Dakota. Click here for the form.

The event kicks off at 1:00 p.m. on October 30 with an update on enhancements and expansion of WDEA's LoadPass Permits system, to be followed by an update on the association's Wise Roads weather station project. The presentations will be followed by a panel discussion about truck permitting issues between industry representatives and county highway managers. The balance of Day One will be devoted to issues associated with North Dakota's growing natural gas production. The day will be capped off by an evening social at 5:30 featuring remarks from Cal Klewin regarding the Theodore Roosevelt Expressway Association and efforts to improve Highway 85.

Day Two opens with a perspective on ethics issues from Minot Senator David Hogue, to be followed by a discussion of workforce issues and an update on the Western Area Water Supply Authority and the Upper Great Plains Transportation Institute's update of its county roads needs study. The morning agenda also features a presentation from the North Dakota Geological Survey about the potential for oil production in different benches in western North Dakota, a panel discussion about the education funding needs of western communities and an interim legislative report from Senator Rich Wardner.

Lt. Governor Brent Sanford will deliver a keynote address during the noon luncheon. The afternoon agenda includes details on lignite research and marketing efforts, and will conclude with a traditional county-by-county production report from Lynn Helms, director of the Department of Mineral Resources. The association's annual business meeting and election of officers will wrap up the event.

Click here for the agenda and registration details. A block of rooms has been reserved at the Grand Hotel. To receive the discounted rate, guests should mention WDEA Annual Meeting when registering. Contact the hotel at: 701-852-3161 or (800) 735-4493.

UMary Offers “Work Smarter” Training

The University of Mary’s Workforce Development Program is offering training this month in Watford City.

Called “Work Smarter,” the program focuses on creating smarter work habits that develop better organizational outcomes and greater personal satisfaction.

Cost per session is $350. Lunch is included with each session. 

Date for the session: 

• Effective Writing and Messaging Strategies – Tuesday, August 27

The session will be held at the University of Mary campus facilities at Watford City High School, located at 2209 Wolves Den Parkway, Suite 129A.  

For more information or to register, click here.  

WDEA Offering Energy Scholarships

The Western Dakota Energy Association will award five $1,000 scholarships this fall to students in an energy-related field at a North Dakota college, university or technical school.

WDEA President Gary Wilz said the association is offering the scholarships to help the industry and western communities meet the workforce challenges now being experienced with the surge in oil industry activity.

“We recognize that North Dakota will see benefits from higher oil prices only if the industry is able to attract the workforce it needs,” said Wilz, who is Superintendent of the Killdeer Public School District. “We want to do everything we can to encourage young people to explore the many opportunities for a rewarding career in the energy industry.”

Funding for the scholarship program is generated by sponsorships of WDEA’s annual meeting, as well as royalties from advertising in Basin Bits magazine.

Click here to learn more about the selection criteria and how to apply.  

Click here to view or download an application form. 

The application deadline is August 31, 2019. Scholarships will be awarded in September.

Quick Connect

Factoid of the Week

The Garrison Dam has been operating since 1955 producing renewable electricity from five turbines rated at a total capacity of 583 MW. It is the fifth largest electric generating facility in North Dakota. The dam itself is two miles long and 210 feet high. It is the fifth largest earthen dam in the world, and was built at a cost of $300 million.

Source: Energy ND – Great Plains Energy Corridor and North Dakota Studies

Upcoming Events

August 19

PSC Formal Hearing on Ruso Wind Project

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Higher Education Committee

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August 22

Department of Corrections and Rehabilitation Review Committee

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Interstate Oil & Gas Compact Commission Annual Meeting

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August 26

Interim Natural Resources Committee

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Tribal Taxation Issues Committee

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Land Department Administrative Rules Hearing

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ND Industrial Commission

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Government Finance Committee

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ND Oil Pac Golf Tournament

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ND Land Board

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September 5 

Workers' Compensation Review Committee

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September 10  

Greater North Dakota Chamber Policy Summit 

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Northwest North Dakota Job Fair

Williston

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Vision West Consortium Meeting  

Tioga

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ND Petroleum Council Annual Meeting

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Bakken Oil Product & Service Show

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WDEA Annual Meeting

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