North Dakota's Oil Patch Is Drawing Investment, And That Means There Is No Bust

This headline from the Wall Street Journal today seems inherently contradictory to me.

In it reporter Chester Dawson writes about companies and investors buying low in the North Dakota oil patch. “The vultures are descending on North Dakota,” he writes, and I guess that’s one way you could look at it.

Another way might be to see these investors as betting on North Dakota’s oil fields not going bust. Because the reason why you buy low is that you have an expectation of selling high.

I realize that the realities of both election year politics here in North Dakota, and the national press corps’ bias against fossil fuel energy, require that we be cynical about the future of North Dakota oil. Suggesting that North Dakota’s oil play hasn’t gone bust will earn you a sneer from many people (sometimes the same people who sneered at me back when I correctly noted that the oil boom was over).

But it’s the truth, I think. The oil has continued to flow in the state, with daily production having fallen, through the most recent reports, less than 10 percent from the oil time record high set at the peak of the oil boom. And there are hints that things will be getting better soon.

Oil prices have seen modest recoveries, and the lifting of the national oil ban is beginning to pay real dividends with oil exports growing as American producers tap into newly available global markets:

Perhaps most importantly, the build out of infrastructure to handle North Dakota’s oil and gas production continues. Despite heated political opposition, progress is being made on building pipelines and refineries, something that will lower costs for production.

That’s a big deal, and every dollar invested in that infrastructure is another bet on recovery.