Oil companies are drilling a lot less in North Dakota than they were a year ago…
Today’s chart shows the number of active oil rigs in North Dakota. From 2011 to 2014, the number of active rigs held steady at around 190. Today, there are only 68 rigs operating in the state.
The number of active rigs has plummeted by two-thirds in just a year. That’s because it’s almost impossible for oil companies in North Dakota to make a profit when oil is $45/barrel.
The huge drop in production isn’t just creating problems for the state’s oil industry. The North Dakota Petroleum Council says that each active rig translates into 120 total jobs. The crash in oil could end up costing North Dakota’s economy up to 15,000 jobs.
This once-booming oil town is quickly turning into a ghost town…
If you follow the oil market, you may have heard of Williston, North Dakota. It’s small…home to just about 30,000 people. And it’s in the middle of nowhere…about an hour south of the U.S.-Canada border. But it’s also right in the thick of the Bakken Formation…
The Bakken is the second largest oil patch in the United States. It covers 200,000 square miles, making it about 20% bigger than the state of California. It holds an estimated 400 billion barrels of oil.
Oil companies have known about the Bakken’s rich oil supply for decades, but until recently, it wasn’t economical to drill for it. That’s because oil in the Bakken is trapped deep within rocks. It’s called “shale oil,” and it’s much more expensive to drill for than conventional oil.
But a few years ago, rapid advances in drilling technology and high oil prices made it economical to drill for shale oil. This triggered a huge U.S. energy boom.
• Oil companies flocked to Williston to drill the Bakken…
Workers followed in search of fat paychecks. The town’s economy exploded.
At the peak of the boom, starting pay for oil workers topped $100,000 per year. Even local fast food workers in the region were making good money, as E.B. Tucker explained in the August issue of The Casey Report:
Starting pay for fast food workers in Williston was $20 an hour…175% above the federal minimum wage. Plus an immediate $500 signing bonus. Plus benefits. That translates into $40,000 over the course of a year.
From July 2010 to July 2013, Williston was the fastest growing town in the country. Soon, there were more oil workers in Williston than beds to sleep in.
Rents skyrocketed. In February 2014, an Apartment Guide survey found that the average rent for a one-bedroom, 700-square foot apartment in Williston was $2,394…more expensive than a comparable apartment in New York or Los Angeles at the time.
Real estate developers quickly moved in and started building apartments. Most people thought the boom was just getting started.
• Then the price of oil crashed…
Last June, oil peaked at over $106/barrel. Today, oil goes for about $45. It’s next to impossible for oil companies in the Bakken to make money at that price.
Earlier this year, Fortune reported that the average “‘all-in,’ breakeven cost for U.S. hydraulic shale is $65 per barrel.” This means most shale oil companies lose money on every barrel of oil they sell for less than $65.
So oil companies have cut back on drilling in the Bakken. The number of wells pumping oil in the area is now at a six-year low.
This has devastated North Dakota’s economy, as Bloomberg Business explains:
Now North Dakota’s white-hot economy is slowing. More than 4,000 workers lost their jobs in the first quarter, according to the state’s Labor Market Information Center. Taxable sales in counties at the center of the nation’s second-largest oil region dropped as much as 10% in the first quarter from a year earlier, data from the Office of the State Tax Commissioner show.
There are hundreds of brand new apartments in Williston, but no one to rent them. Vacancy rates are around 65% for new apartments and 70% for housing camps. Apartments that used to rent for $2,000 a month are now renting for $200 a month. It’s turning into a ghost town.
Middle Class American goose is nearly dead but typical American on welfare is goose foie gras.
Hardly a day goes by without downsizing, default, info among the frackers large and small in OKC paper.
http://newsok.com/sandridge-energy-headquarters-sale-is-taking-longer-than-expected/article/5453545
http://newsok.com/article/5453571
Now is the time to buy in North Dakota ? Might be some good opportunities for wise investors.
I love the smell of malinvestment in the morning.
There are no $200 apartments in Williston. Try $1000. $2394 one bedroom was for executive lease,
fully furnished with underground parking. Drill activity reflects 60% decline in cash flow. Area now being
drilled has a per barrel cost of $28. Per barrel cost vary as much as 300% across the entire field. New
apartments have 35% vacancy rate and rent reduced 30%. There are 1350 more apartments yet to be
finished this year and road traffic is way down. Grocery stores still very busy and sales tax down 10%
reflect ongoing production of 13,000 wells. Locals see this as a normalization, boom gets old. If a few
large out of state developers get burned a little that’s a shame.
The golden goose was American small business, not a few counties worth of oil boom in ND. That goose was just providing cover for the loss of the real steam-engine of our greatness.
Obama and the House of Saud did this. Said it was to “stop Russia” and ISIS/ISIL but some of us knew better.
This is what planned demolition looks like. Knock the supports out and the building falls.
Another step on the road to rounding up the survivors and shipping us to urban ghettoes on the coasts, just as Agenda 21 specifies.
Another article today stated that over 100 million workers are making less than $17,000 annually. Before taxes, that is.
Tell me again about this “golden goose” in oil?
The oil “boom” was just a gift to the oil refiners – we can’t export crude, just gasoline and we aren’t using that much gas – and Wall Street and regulators. A few people, like Steevio above, may have accidentally benefited too.
Another note, it wasn’t just the price of a barrel of oil that led to the fracking boom. It absolutely, positively, was the removal of decades of EPA/environmental protections for the benefit of the oil companies.
In America we love to eat food that is loaded with toxic chemicals that the FDA/USDA allows. Why? Because the vast majority believe those two paragons of health (have you seen your fellow ‘murkins lately?) say it is not “significantly different” and “safe.” It isn’t, but that is a story for another day.
We also love to believe the EPA – which is shutting down power plants, Michigan is set to lose 29 in the next five years – and shutting down companies over non-existent wetlands, is actually keeping our environment safe.
Fracking isn’t safe. Toxic, DEADLY, chemicals are used and then left in the ground or put into holding ponds to leak into our lakes, streams and groundwater.
Of course this, too, is yet one more baby step on the die off and forced relocation our leaders have planned for us.
Wipe out the class that might have had the money and resources to stop it. Check. Convince people to trade health for poisons, pills and doctor visits. Check. Make utilities and food too expensive for even working people. Check. And finally, salt our very earth so that we can no longer live on it. Double check.
Fix it. Wow. Just how in the hell would that ever happen? Accidentally? Collateral damage to their plans? Reversal of our carbon footprints?
Don’t believe the propaganda. This mess isn’t accidental. Nor is the pain and suffering headed our way.
Fracking uses food grade additives to overcome friction. Everything that comes out of an oil/gas well
is hazmat, including water. No holding ponds in ND, everything is captured and treated, and re-injected
7,000 deep in disposal wells. Refinery is a low margin business, but you probably don’t like
Wal Mart either. EPA is trying to regulate stock pond here on biological connection, IE;if a bird
lands in it we can regulate it. You are a nut TE.