Stark County, North Dakota WESTERN NORTH DAKOTA ENERGY PROJECT SHALE PROJECTION WEBINAR SERIES An Initiative of the Strom Center for Entrepreneurship & Innovation at Dickinson State University
ACKNOWLEDGMENTS Our Analysts: 1. Lynn Helms, ND Dept of Mineral Resources 2. Dean Bangsund & Dr. Nancy Hodur, NDSU Our Funders: Bush Foundation Vision West ND US Dept. of HUD Regional Sustainability Planning Grant Our Moderators: Dr. Dick Gardner Don Macke Senior Fellow and Co-Director, RUPRI Center for Rural Entrepreneurship Our Local Host & Coordinator: Deb Nelson, DLN Consulting
ROLE OF KEY PLAYERS 1. ND Dept of Mineral Resources Describe scale, duration & pacing of Bakken development consistent with geologic resource Identify dynamic variables, i.e. deal changers 2. NDSU Dept of Agribusiness & Applied Economics Create socio-economic models that build on Helms Distribute regional impacts among counties 3. Center for Rural Entrepreneurship Concerned with community implications & policy, e.g. maximizing benefits, crowding out effects Decision aids for local leaders
North Dakota Department of Mineral Resources http://www.oilgas.nd.gov http://www.state.nd.us/ndgs 6 East Boulevard Ave. - Dept 45 Bismarck, ND 5855-84 (71) 328-82 (71) 328-8
9 NORTH DAKOTA COUNTY OIL PRODUCTION, 1952-29 29 8 7 6 5 4 3 (millions of barrels) 2 1 1952 1957 1962 1967 1973 1978 1983 1988 1993 1998 23 29 All Others Bottineau Williams McKenzie Stark Bowman Billings
WESTERN NORTH DAKOTA WELL PROJECTIONS 1,8 to 3, wells/year = 2, expected 15-25 rigs = 12, 3, jobs Another 1,-15, jobs building infrastructure 2 rigs can drill the wells needed to secure leases in 1 year 2 rigs can drill the wells needed to develop spacing units in 18 years 35,-4, more new wells
Helms Bakken Development Scenarios Possible Probable Proven
Wild Cards Draft BLM Hydraulic Fracturing rule could double federal drilling permit approval time or worse. Draft EPA guidance on diesel fuel in hydraulic fracturing could triple drilling permit approval time or worse. Current administration budget contains tax changes that could reduce drilling capital 35-5% The future looks promising for sustained Bakken/Three Forks development World and U.S. economies continue to struggle. If China joins the downward spiral oil price could fall enough to make some areas uneconomic
1,5, 1,35, 1,2, 1,5, 9, 75, 6, 45, 3, 15, MONTHLY OIL PRODUCTION FOR STARK COUNTY 7 63 56 49 42 35 28 21 14 7 1977 1991 24 STARK wells
3 27 24 21 18 15 12 9 6 3 Stark County Rigs and Wells 3 27 24 21 18 15 12 9 6 3 25 21 215 22 225 23 235 24 245 25 Year Rigs Wells
4 36 32 28 24 2 16 12 8 4 Tyler Formation Rigs and Wells 25 21 215 22 225 23 235 24 245 25 Year 4 36 32 28 24 2 16 12 8 4 Rigs Wells
12. jobs per drilling rig 3. wells per gathering contruction job 1. jobs per frac spread 4. wells per frac spread per year 1. total jobs to support one producing well 12. wells per rig per year.85 ratio of phase 2 rigs to phase 1 rigs.8 ratio of phase 2 well construction jobs to phase 1 2.5 secondary jobs per industry job INDUSTRY ESTIMATES OF EMPLOYEES PER WELL Recent industry estimates of 6 by year end 213 Crowding out effect Housing Day care Variable currently.7 Direct Indirect Indirect Production 2. Company Rep. 1.4 Construction.8 Mud Engineers.9 pumper 2. Tool Pusher.3 Surveyors.8 Bit Sales.6 company professionals 4. Wellsite Geologist.4 Crane services 3.4 Water haulers.4 workover crews 8. Directional Drillers 2. Rig hauling 1.2 Fuel Haulers.2 roustabouts 4. Drillers 4.1 Other trucking 1.6 Mud Haulers.28 water disposal 4. Derick Hands.3 Well logging 3.3 Casing Crew.35 oil transportation 12. Floor Hands.1 DST services.8 Cementing.1 supply sales 8. Mud & cuttings 3.9 Completion Rig.8 regulatory.11 gas processing 1.1 Perforating.2 Biology & Botany.1 regulatory 6.6 Frac tank hauling.2 Archeology.9 Reclamation 8.3 Equip Mfg 1.8 Flowback testing 4.6 Roustabouts 44. 22.8 53.3 12. Total Well Construction Jobs per rig 1. Total Producing Jobs per well Note: 25% of jobs are trucking water Total trucking jobs = 36.6% New Bakken wells currently 3.5 EOR 1.5
1, Stark County Oil Industry Jobs Jobs 9, 8, 7, 6, 5, 4, 3, 2, 1, 25 21 215 22 225 23 235 24 245 25 Year Prod jobs Gathering jobs Fracing jobs Drilling jobs
Tyler Formation Oil Industry Jobs 1, 9, 8, 7, 6, Jobs 5, 4, 3, 2, 1, 25 21 215 22 225 23 235 24 245 25 Year Prod jobs Gathering jobs Fracing jobs Drilling jobs
STARK COUNTY PROJECTED EMPLOYMENT Year Drilling Gathering Fracing Prod Rigs Wells jobs jobs jobs jobs 25 12 24 3 71 1 72 26 12 24 72 1 73 27 12 24 71 1 72 28 24 23 69 2 7 29 24 22 8 66 2 67 21 24 23 38 69 2 7 211 18 28 175 83 9 85 212 84 52 275 152 7 155 213 84 88 275 26 11 265 214 132 125 275 368 11 375 215 132 162 275 476 11 485 216 132 198 275 583 11 595 217 132 235 275 691 11 75 218 132 272 275 799 11 815 219 132 38 275 97 11 925 22 132 345 275 115 11 135 221 132 35 275 1123 11 1145 222 132 15 234 1231 11 1255 223 112 1 234 1322 9.35 1349 224 86 5 234 1414 9.35 1442 225 86 4 234 156 9.35 1536 226 86 3 234 1597 9.35 1629 227 86 3 234 1689 9.35 1723 228 86 3 234 1781 9.35 1816 229 86 3 234 1872 9.35 191 23 86 3 234 1964 9.35 23 Year Drilling Gathering Fracing Prod Rigs Wells jobs jobs jobs jobs 231 86 3 234 256 9.35 297 232 86 3 234 2148 9.35 219 233 86 3 234 2239 9.35 2284 234 86 3 234 2331 9.35 2377 235 86 3 2423 9.35 2471 236 86 3 2423 1.25 2471 237 115 3 2423 1.25 2471 238 115 3 2423 1.25 2471 239 115 3 2423 1.25 2471 24 115 3 2423 1.25 2471 241 115 3 2423 1.25 2471 242 115 3 2423 1.25 2471 243 115 3 2423 1.25 2471 244 115 3 2423 1.25 2471 245 115 3 2423 1.25 2471 246 115 3 2423 1.25 2471 247 115 3 2423 1.25 2471 248 115 3 2423 1.25 2471 249 115 3 2423 1.25 2471 25 115 3 2423 1.25 2471
TYLER FORMATION PROJECTED EMPLOYMENT Year Drilling jobs Gathering jobs Fracing jobs Prod jobs Rigs Wells 25 2 5 5 26 2 5 5 27 2 5 5 28 2 5 5 29 2 5 5 21 2 5 5 211 2 25 5 5 212 12 5 25 15 1 15 213 12 8 5 25 1 25 214 12 15 5 44 2 45 215 24 22 375 64 2 65 216 24 72 375 211 15 215 217 181 122 5 358 15 365 218 138 188 319 554 2 565 219 1841 231 319 679 12.75 693 22 1173 273 319 84 12.75 82 221 1173 316 319 929 12.75 948 222 1173 358 319 154 12.75 175 223 1173 25 319 1179 12.75 123 224 1173 1 319 134 12.75 133 225 1173 5 319 1429 12.75 1458 226 1173 25 319 1554 12.75 1585 227 1173 1 319 1679 12.75 1713 228 1173 1 319 184 12.75 184 229 1173 1 319 1929 12.75 1968 23 1173 1 319 254 12.75 295 Year Drilling jobs Gathering jobs Fracing jobs Prod jobs Rigs Wells 231 1173 1 319 2179 12.75 2223 232 1173 1 319 234 12.75 235 233 1173 1 319 2429 12.75 2478 234 1173 1 319 2554 12.75 265 235 1173 1 319 2679 12.75 2733 236 1173 1 285 12.75 286 237 1173 1 285 286 238 1 285 286 239 1 285 286 24 1 285 286 241 1 285 286 242 1 285 286 243 1 285 286 244 1 285 286 245 1 285 286 246 1 285 286 247 1 285 286 248 1 285 286 249 1 285 286 25 1 285 286
HELMS LIST OF DYNAMIC VARIABLES 3 Expected Ultimate Recovery of oil scenarios 3 Scenarios of secondary employment Additional Factors Not Modeled: Technology Change (Wells/pad; wells/rig/year; fracs/crew/year) Oil collection & water distribution pipelines Increased use & share of natural gas Oil price dynamics Shift towards permanent residents Crowding out of other economic sectors Hundreds of possible scenarios
NDSU EMPLOYMENT, HOUSING & POPULATION PROJECTIONS Department of Agribusiness and Applied Economics North Dakota State University Dean Bangsund Research Scientist Dr. Nancy Hodur Research Assistant Professor Ph: 71-231-7471 Ph: 71-231-7357 d.bangsund@ndsu.edu Nancy.Hodur@ndsu.edu
NORTH DAKOTA STATE UNIVERSITY MODEL Consistent with and builds upon Helms model Rapidly changing technology & other variables led NDSU away from trad I/O models and into uncharted territory Projects to 236 instead of Helms 25 Consensus, pessimistic, & optimistic scenarios Splits jobs into permanent vs transient Is more accurate at regional level Communities can affect the local distribution of opportunities, impacts, risks, and growth.
DYNAMIC ELEMENTS ANNUAL CHANGES OVER 212-36 Drilling efficiency in ND - 1/wells/rig/yr to 12 by 232 Employment /drilling rig - 12 FTE/rig to 1 by 216 Oil field service 2% job reduction, trucks to pipelines Temp vs Permanent employee ratio Secondary employment from permanent employees more than doubles from.5 jobs per employee Base Employment constrained in Williston & Dickinson regions to show some crowding out effect Housing Mix change in type over time, more apts County Housing Share changes in some counties with trends
2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 219 22 221 222 223 224 225 226 227 228 229 23 231 232 233 234 235 236 6, 5, 4, 3, 2, 1, North Dakota Total Direct Employment Petroleum Sector Consensus Scenario Temporary Direct Permanent Direct
6, 5, 4, 3, 2, 1, ND Petroleum Sector Employment Consensus Scenario Drilling & Fracing Oil Field Service Gathering Total 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 219 22 221 222 223 224 225 226 227 228 229 23 231 232 233 234 235 236
GOLDEN VALLEY BOWMAN DIVIDE State Planning Region 1 MCKENZIE SLOPE BILLINGS WILLIAMS State Planning Region 8 DUNN ADAMS BURKE MOUNTRAIL STARK HETTINGER WARD State State Williston Region Minot Region RENVILLE BOTTINEAU Planning Region Region 2 2 MCHENRY PIERCE Dickinson Region Major trade centers
.6 Petroleum Employment as % of Total Employment.5.4.3 Dickinson Region Williston Region Minot Region.2.1
2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 217 218 219 22 221 222 223 224 225 226 227 228 229 23 231 232 233 234 235 236 4, 35, 3, 25, 2, 15, 1, 5, Dickinson Region Composition of Employment Consensus Scenario Secondary Added Total Direct Petroleum Other Employment
45, Dickinson Region Permanent Housing Units 4, 35, 3, 25, 2, Pessimstic Consensus Optimistic 15, 1, 5,
212 213 214 215 216 217 218 219 22 221 222 223 224 225 226 227 228 229 23 231 232 233 234 235 236 4, 35, 3, 25, 2, 15, 1, 5, Dickinson Region Consensus Scenario Demand: Housing Units Total (service) Housing Units Permanent (census) Housing Units
8, Dickinson Region Permanent (Census) Population 7, 6, 5, 4, 3, Pessimstic Consensus Optimistic 2, 1,
3, Stark County Permanent Housing 25, 2, 15, 1, Pessimstic Consensus Optimistic 5, 21 212 214 216 218 22 222 224 226 228 23 232 234 236 25, Stark County Consensus Scenario 2, 15, 1, Service Permanent 5,
5, 45, 4, 35, 3, 25, 2, 15, 1, 5, Stark County Permanent Population 45, 4, 35, 3, 25, 2, 15, 1, 5, Pessimstic Consensus Optimistic Stark County Consensus Scenario Service Population Permanent Population
STARK COUNTY PROJECTIONS (CONSENSUS) 212 22 236 Permanent Housing % Ave Annual Growth Permanent Population % Ave Annual Growth 11,23 16,283 21,125 212-22 212-22 4.6% 1.6% 23,253 31,549 4,93 212-22 22-236 3.8% 1.6%
CONCLUSIONS Not last word; instead first comprehensive projection of employment, housing, and pop Best available data & best local experts Scenario of likely future; not precise prediction Our job to give you input This boom is much longer-lived than 8s boom You have the ability to affect the amount of growth that comes to your community. You decide about your community s vision for itself, and make decisions on that basis.
WHAT IF YOU ARE WRONG? If you are too cautious: Your community will under-invest in public infrastructure and private development, You will fall short of maximizing the number of workers, new residents, and economic activity. A cautious region will have short-term crowding out of secondary spending Long-term w/o enough temp housing, oil workers may crowd out others and other sectors will lose If you are too aggressive : Over-investment in public infrastructure and private investments >> bankruptcy and higher taxes for residents left holding the bag
HOW CAN A COMMUNITY GET ITS SHARE? Agree on community vision & goals Conduct infrastructure planning & implement Use land use planning to encourage, condition, and site housing & community development Plan/require amenities that improve quality of life, e.g. parks, trails, rec facilities, comm. ctr. Regardless of vision, plan for increased traffic flows, truck by-passes, etc.
THOUGHTS? WHAT ELSE? We ve outlined a likely scenario, and flanked it with optimistic and pessimistic alternatives to offer you a plausible range of outcomes in an uncertain & dynamic world. 1. What other questions need to be answered? 2. Are there scenarios you d like to see? 3. Are there other subjects or community impacts for a webinar of lessons learned in other boomtowns?