Posted 5/20/14 (Tue)
By Kate Ruggles
Farmer Staff Writer
A lot has been said about the oil play in McKenzie County and how important it is for the state of North Dakota. But what does it all really mean?
Depending on who is asked, it can mean a lot of different things, but it truly boils down to one - McKenzie County is smack dab in the center of, and on top of, a resource that a lot of people are trying to get their hands on.
“McKenzie County is extremely important to North Dakota’s oil production,” states Ron Ness, director of the North Dakota Petroleum Council. “It is the state’s top-producing county, and has by far the most drilling rigs and activity of any other oil-producing county. It is the epicenter of the Bakken.”
According to Alison Ritter, Public Information Officer for the Department of Mineral Resources, in February McKenzie County’s well count was at 2,286, 470 more than the nearest competing county of Mountrail. During that same month, the county produced 8,143,125 barrels of oil and 12,352,825 mcf of natural gas. And to date, there are an average of 190 rigs operating in the state, 72 of which are in McKenzie County. That is over one-third of the state’s drilling rigs operating in McKenzie County.
Gene Veeder, McKenzie County’s Economic Development Director states that what makes McKenzie County so sought after in this oil boom is its strategical and geographical location.
“We are at the physical crossroads of U.S. Highway 85 and N.D. Highway 23. So a lot of activity comes right through Watford City, which means that a lot of development interest comes through here too,” states Veeder. “Essentially a lot of people want to set up shop here and live here.”
Veeder states that Whiting Oil, MBI, and Nuverra have all set up shop in Watford City. The growth started with oil activity, but according to Veeder, it is now about so much more.
“One job that makes $100,000 a year contributes to car and restaurant sales. The growth in the economy that is generated here is about the jobs that it creates,” states Veeder. “The financial industry and the service industry have all grown as a result of the oil activity.”
Ness adds that McKenzie County has a geological draw in that what is bringing people and businesses to McKenzie County is the oil it is sitting on top of.
“McKenzie County represents the deepest portion of the Williston Basin, which means there are potentially multiple targets. It has a Bakken target and three, or in some areas, four benches of Three Forks Formation,” states Ness.
Steve Nordeng, a subsurface geologist for the North Dakota Geological Survey, puts it this way, “McKenzie County is in the center portion of the Williston Basin. It has a lot of oil activity, because it is on top of the deepest and hottest portion of the basin and has generated a lot of oil.”
Nature’s recipe for making oil, according to Nordeng, is organic material buried deep within the earth’s surface and heated to extremely high temperatures for a long period of time. According to Nordeng and Ritter, the geology of North Dakota is so sure that not only have people referred to the Shale beneath its surface as world class source rock, but it is the second highest oil-producing state in the nation behind Texas.
“You can produce year-round in Texas because it is warmer than it is here,” states Ritter. “There are only so many months that are conducive to production in North Dakota. Therefore, North Dakota being the second-highest oil-producing state is a testament to not only the amount of oil here, but the quality of oil here.”
Though McKenzie County has so much going for it, there is also a lot to be aware of concerning its future.
“There are transportation issues and cost of production issues that are always good for us to be aware of,” states Veeder. “What are the costs of producing here? Can they produce more efficiently elsewhere? Some will tell you that the costs of producing here make it more expensive to get the oil out, and all of these factors could slow production.”
According to Veeder, it began with the shear numbers that were coming out of Watford City and the fact that a large percentage of oil production is coming from McKenzie County. But when planning for the future of McKenzie County, all factors have to be taken into consideration.
“It looks like we will continue to see strong growth, but you always have to be aware that things could happen that may slow production,” states Veeder. “But all of this happened in one of the biggest national recessions, so if the economy picks up around the country, the demand could be even higher, too.”
According to Nordeng and Ritter, McKenzie County is one of the four core counties in North Dakota in which the price of oil would have to drop below $40 per barrel before production would cease.
“Look in the past and look where the community is heading now,” states Ness. “The Bakken has been like success on steriods and it has not come without its challenges. But what is going on now is not a typical boom/bust type of cycle. And with what we have found in McKenzie County, we have gotten more of a sense of all that is in the Bakken.”
The Industrial Commission believes that an average of 190 rigs can drill out the number of necessary wells in 20 years to keep production moving until 2025. But according to Veeder, “we also know that right now we are only getting less than 10 percent of the Bakken. The future is that we will continue to get more enhanced technology to get more oil out of what is here. It will not go on forever, but all indications show that it will go on for a long time.”