Cost Of Developing An Oil Well In ND Has Gone Up Almost 29% In Nine Months
This isn’t a good trend. The higher production costs go the less sustainable North Dakota’s oil boom becomes:
Lynn Helms, director of the department that includes the state’s oil and gas division and geological survey, is now quoting $8.5 million for drilling and completing a Bakken well, versus the $7.3 million estimate he used in a December presentation, and the $6.6 million figure he used in August. …
The latest estimate is in a slide he used in a March 20 presentation to the North Dakota Legislature’s Energy Development and Transmission Committee, titled “What Does Every New Bakken Well Mean to North Dakota.”
Helms told legislators that oil companies are using a “flat $86 per barrel” for their “forward economics.”
If the oil price “drops to $55 per barrel we’ll lose rigs and that will put us on the black curve,” he says.
The state legislature shot down an opportunity to simplify North Dakota’s absurdly complicated oil extraction tax in the last legislative session – a move backed by former Governor Ed Schafer – and earlier this year the state passed some of the most stringent new oil regulations in the country which oil industry representatives say will add $400,000 to the cost of each well.
For right now market conditions are still very favorable for oil development in North Dakota. But those conditions can change quickly. Let’s hope our state’s leaders, too busy spending the tax revenues windfall resulting from the boom and passing new regulations, haven’t killed the goose that kills the golden eggs.Tags: bakken, fracking, North Dakota News, oil