By BRYCE MARTIN | Pioneer Editor | firstname.lastname@example.org
Several oil companies with producing wells in North Dakota have found themselves in a conundrum with this month’s announcement of crude oil prices falling below $56 per barrel.
The effect from the “staggeringly” low prices has its good point, namely bringing much cheaper prices to the gas pumps around the country, but it could have a devastating effect on North Dakota’s economic surge.
Oil industry leaders, however, have cautioned that it is just a cyclical movement in the production of oil and would not have lasting effects on the state’s economy.
The price of Brent crude—sweet light crude oil that serves as a major benchmark price for purchases of oil worldwide—in June was up around $115 per barrel. It fell to nearly half that by the middle of this month, hovering below $56 as of Tuesday, according to Bloomberg.
There is a plethora of reasons for the drop in crude oil prices.
The high prices of oil since the early part of the decade were the result of conflicts in oil producing countries such as Libya and the soaring consumption of oil oversees, such as in China. Oil production was not able to meet the demand and prices became greatly inflated.
North Dakota has since spurred the country’s oil production over the last decade and oil supply became much higher than the demand. That was combined with easing tensions in foreign conflict and the need for oil in other countries slowly fading in part to respective weakening economies.
But now the problem is heading close to home.
Of the total 1,558 oil rigs on file, only 530 are currently producing. Bowman County has produced 681,007 barrels of oil since August.
Bowman County’s current amount of active rigs stands at only three – two owned by Denbury Onshore LLC and one owned by Continental Resources. Continental’s rig began drilling Dec. 8, but Continental Resources recently began a drawback of its rigs within the county.
A message left by the Pioneer to Continental’s headquarters in Oklahoma was not returned by the time this article went to print. Both the Rhame and Baker field offices for Continental were not able to comment.
The drawback of active rigs signals a loss of local jobs and could have further negative effects on the local economy.