Posted 1/26/16 (Tue)
By Neal A. Shipman
At a time when many people are worried about the effect today’s low prices of oil will have on the local and state economy, as well as the oil industry in general, there are several positive signs that the long-term prospect for the state’s oil industry is good.
Yes, there are issues that everyone is going to have to deal with, such as the state of North Dakota dealing with less revenue and being forced to make budget cuts. Likewise, local governments, which also have relied on oil revenues, are going to have to do some belt-tightening as a result of the $30 a barrel oil.
Just as private businesses have been forced to react to the dramatic drop in oil prices by slashing their budgets and reducing operating costs, government will also have to react and right-size to meet today’s oil prices.
These are just short-term corrections to adapt to what is happening in the oil industry.
But what is encouraging for the long-term for the state’s oil industry and for the state of North Dakota, is that companies, even with today’s low oil prices, are still investing billions of dollars to build the infrastructure that will carry the state’s oil industry forward.
Such is the case with the construction of the Dakota Access Pipeline, which will carry up to 600,000 barrels of Bakken oil to market.
Last week, the North Dakota Public Service Commission approved a siting permit for a $3.78 billion, 1,154-mile pipeline that will carry crude oil across Mountrail, Williams, McKenzie, Dunn, Mercer, Morton and Emmons counties, South Dakota and Iowa, before ending in Illinois.
With the Keystone Pipeline stalled as a result of President Obama’s veto, alternate pipelines, such as the Dakota Access Pipeline, are critical to get North Dakota’s oil to market.
Make no mistake. Dakota Access Pipeline’s decision to move forward with the construction of this pipeline is not only huge news for North Dakota, it should also be recognized that companies are willing to make very substantial investments in North Dakota’s oil industry. And Dakota Access is not alone in helping build the infrastructure that will carry North Dakota years into the future.
Which is what is exactly happening. Private businesses are building North Dakota’s oil industry from the ground up. Yes, we have the oil. And we have the capability to drill and produce the oil and natural gas. But what good is having all of this oil and natural gas, but not having the ability to get that product to market?
North Dakota needs more natural gas plants and pipelines. And, even with today’s low oil prices, those investments are being made.
And those investments speak volumes on where private business and investors see North Dakota’s oil industry becoming in the future.