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The Impact of Oil in North Dakota: Eggs & Issues Recap

January 5th, 2016 by Amanda Hofland

Ron Ness, president of the North Dakota Petroleum Council, recently traveled to Frisco for the Bison game and estimates that he saved $1.30 per gallon in gas on his road trip thanks to the Bakken. It’s just one example of how much impact the North Dakota oil industry has on all of us.

ron ness at fargo chamber eggs and issues

North Dakota still has quite an impressive production of oil, despite current prices and the slowdown of the industry. In October 2015, there were 62 drilling rigs (compared to 186 a year ago) and 13,036 producing wells.

Currently in North Dakota, we’re producing 1 million barrels of oil a day. According to Ness’ statistics, one oil well produces 2.4 jobs, $860,000 in in-state expenditures, $23,500 in sales, use and income taxes and a $1.7 million direct and secondary impact.

The Bakken impact on North Dakota alone is notable, with 15.3% or one in seven jobs attributable to oil and gas related employment, 28.5% of total wages and a $43 billion economic contribution. Yet 20,000 jobs were lost in 2015 due to the slowdown.

“From an environmental standpoint, there is no place in the world that is producing oil with a smaller footprint than what we’re doing right here. This is farmland with energy development. The technology is simply amazing, and we developed that right here.”

Ness also took time to speak on the Oil Export Ban, thanking our congressional delegation for overturning it as it helps us better supply the world with energy and oil as it opened up the market.

“For the last 30 years, every time there’s been unrest in the Middle East, oil went up by about $7,” Ness commented. “That’s not happening anymore. With all the things in Paris, we didn’t even see a blip. I think oil went down that day! And I think that’s because we’re producing more oil here.”

While some may think of the current oil market as a bust, Ness says that’s not so due to our current production numbers with fewer rigs and long-term estimates. It’s simply a slowdown and a market correction.

That being said, for the meantime, optimism is not great among leaders. “We certainly hope that there is some recovery in price,” Ness said. “I fully expect things to get worse the first half of 2016, but hopefully some recovery later in 2016 and into 2017.”

The question then becomes how to recover and become more efficient. “There is no proven technology today that teaches us how to get more oil out of shale like the Bakken,” Ness said, “but I am fully confident that technology will be developed right here in North Dakota. We’re going to be the leader in the world in how to get that extra 5 or 10% of oil out of that reservoir. …I am confident that we will tackle this.”

After Ness’ presentation, State Tax Commissioner Ryan Rauschenberger took the stage to share some of his own insights, including the significance of the revenue stream.

ryan rauschenberger at eggs and issues

  • North Dakota has two oil tax types: Oil & Gas Production Tax of 5% and an Oil Extraction Tax of 5%.
  • Oil production is forecast to collect $3.96 billion in oil taxes in the 2015-17 biennium.
  • Fargo and West Fargo are defined as hub cities in HB 1176, which means that we meet population requirements and have enough percentage of private employment engaged in oil and gas-related endeavors. Nine cities in North Dakota are hubs (with just three located in oil producing counties), and receive funding for school districts.

ND Oil Tax Presentation Page6

CLICK HERE TO VIEW RON NESS’ PRESENTATION SLIDES

CLICK HERE TO VIEW RYAN RAUSCHENBERGER’S PRESENTATION SLIDES

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January’s Eggs & Issues speakers and sponsors. From L to R: Ron Ness, Mark Nisbet with Xcel Energy, Dave Anderson with Sanford, and Ryan Rauschenberger.

Thanks to the Courtyard by Marriott for hosting Eggs & Issues for the first month. We look forward to the next year at the facility and to more delicious breakfasts, great networking and meaningful discussion.

Check out these Tweets from attendees!

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